ETF 360: Dimensional Launches UMA

SMA’s are often characterized as direct indexing, while a UMA can use multiple vehicles. Accordingly, they are more flexible.

Ask how Hendrix said, “Dimensional launched our SMA platform about two and a half years ago. Since then we’ve grown to about two and half billion dollars and 900 accounts.” According to Hendrix, advisors appreciate customization. “By coming out with a UMA, we’re allowing advisors more flexibility in how they are building these allocations and then outsourcing the day-to-day management to Dimensional.”

That outsourcing is crucial to advisors. Hendrix noted, “We can deliver multi-faceted tax management. We make better outcomes for investors by bringing all of these pieces together.”

Advisors look to SMAs to customize ESG restrictions and tax management. UMAs bring in the model management component, allowing for advisors to design their own asset allocations while Dimensional handles the rebalancing.

One of the main reasons advisors seek out SMAs is for the tax management perks. “We also have tax management at the overlay, at the unified managed account level. What I think is unique is that it’s the same manager working within the SMA sleeve and at the overlay level,” Hendrix said. She pointed out that this creates unique synergies. Advisors can harvest losses within the SMA sleeve and then use those losses to offset gains at the overlay sleeve. “It truly is unified in that sense of the UMA, by bringing those pieces together and letting them talk to each other.”

Asked if the UMA offered exposure to Dimensional products only, Hendrix shared that they allow for other ETFs. “We really want to leave it up to the advisor to determine the allocation that is best for their investor.”

Dimensional has an upcoming webcast that will highlight their UMA platform.

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