Client Login TaxCaddy Access Let's Talk
Back
Let's Talk

Update from Dimensional Fund Advisors

We are happy to share a beneficial change coming for our clients that hold the Dimensional Fund Advisors (DFA) Tax-Managed US Targeted Value (DTMVX) fund. This fund is scheduled to convert from a mutual fund structure to an exchange traded fund (ETF) structure on June 11, 2021. The formal announcement from DFA with details of the conversion should have been sent to you in the past week by email or snail mail, depending on the communication preference set up with your custodian, but we wanted to share directly with you why this conversion is happening and the benefits of it.

The primary reason for this conversion is to further improve the tax efficiency of the investment, as the ETF structure is more tax friendly than a mutual fund structure. It is important to note that the conversion is a tax-free event and no action is required by you. Additionally, your mutual fund shares will convert to shares of equal value of the new ETF; your interests will not be diluted. Any fractional shares of your mutual fund position will be redeemed and paid out at net asset value (NAV) because you cannot hold fractional shares of an ETF.

The benefits to you include:  

  • Reduced management fees on the ETF from .40% to .30% (25% reduction)
  • No trading costs to buy or sell (costs were typically $15 for the mutual fund)
  • Better management of capital gain distributions at year end

In summary, you will have the same investment exposure for less cost and greater tax efficiency!

Again, no action is required on your behalf, but we wanted to make sure that you are aware of the upcoming change. Please do not hesitate to reach out to your advisor with any questions.  

Truepoint Wealth Counsel is a fee-only Registered Investment Adviser. Registration as an adviser does not connote a specific level of skill or training. More detail, including forms ADV Part 2A & 2B filed with the SEC, can be found at TruepointWealth.com. Neither the information, nor any opinion expressed, is to be construed as personalized investment, tax or legal advice. The accuracy and completeness of information presented from third-party sources cannot be guaranteed.