Dimensional merges $250B into unified ETF share classes

Dimensional is combining eight U.S. equity ETFs and their related mutual funds into unified ETF share classes that will cover about $250 billion in assets and reduce targeted management fees by an asset-weighted average of 9%, effective Nov. 1, 2026.

The consolidation brings together roughly $100 billion of ETF assets and $150 billion of mutual fund assets under a single underlying portfolio for each strategy. The firm is using SEC exemptive relief it secured last year to operate ETF share classes inside mutual funds, allowing one pool of securities to serve both ETF and mutual fund wrappers.

The firm will merge eight U.S. equity ETFs into equivalent mutual fund structures with identical systematic investment objectives. Well-known funds will retain their public identities and tickers; for example, the Dimensional U.S. Core Equity 2 ETF (DFAC) will keep its ticker while drawing on the combined asset base.

Dimensional said combining portfolio management and operations across the merged funds will generate scale efficiencies. The firm identified lower transaction costs, improved tax efficiency and more efficient rebalancing as sources of savings that support the fee reductions.

The company introduced its first actively managed ETF share class earlier this year with the Dimensional US Micro Cap ETF (DFMC). Other asset managers have begun to adopt ETF share classes and institutional conversions, increasing industry activity around the structure.

Gerard O’Reilly, co-CEO and co-CIO of Dimensional, stated that the firm has long supported broader availability of ETF share classes for their potential tax efficiency, cost savings and economies of scale. He added that mutual funds and ETFs are expected to coexist and that investors should prioritize investment philosophy over fund wrappers when choosing strategies.

Todd Rosenbluth, head of research at TMX VettaFi, wrote that deploying ETF share classes into client portfolios will require significant operational changes. “Actually getting these products into portfolios will require immense patience,” he wrote, noting that regulatory approvals differ from the work needed to rebuild trading, clearing and compliance systems.

Dimensional said investors will be able to access each strategy through either an ETF share class or a mutual fund share class and may convert between the two where permitted. The firm framed the restructuring as a way to offer dual access points, shared management and lower costs through a single management team and shared operational infrastructure. The fee reductions and the new share class structure take effect Nov. 1, 2026.