Dimensional Fund Advisors is preparing to enter Europe’s exchange traded fund market, seeking to expand its footprint beyond the US where it is already the largest active ETF issuer.
The $853bn asset manager has filed to list two UCITS ETFs by the end of 2025, subject to regulatory approval, in what marks its first foray into the region’s rapidly growing ETF sector. The funds will complement Dimensional’s existing UCITS mutual funds and separate account solutions already available to European clients.
The two initial ETFs will target developed markets. One will act as a core all-cap strategy, while the other will focus on small- and mid-cap value stocks. Both are set to list in London, in US dollar and sterling denominations, and in Frankfurt in euros.
Dimensional has long experience running active ETFs. Since launching its first strategies in the US in 2020, it has built a $200bn ETF franchise across more than 40 products. It also manages ETFs in Australia, giving the firm a global base of operational expertise to support the European rollout.
The new funds will be run using Dimensional’s systematic, evidence-driven investment philosophy, which it has applied since its founding in 1981. The approach combines broad diversification and low costs with a flexible daily process that tilts portfolios toward securities with higher expected returns, such as companies with smaller market capitalisations or lower valuations.
Dimensional argues that this framework allows it to seek consistent outperformance of market benchmarks without relying on conventional stock-picking. Unlike index trackers, the firm’s active ETFs are not bound by the need to minimise tracking error, giving portfolio managers discretion to adjust exposures each day in pursuit of incremental return.
How will Dimensional be managing these ETFs?
The UCITS ETFs will be managed alongside Dimensional’s other fund families, with responsibilities shared across its research, portfolio management and capital markets teams. Their strategies will mirror existing UCITS offerings, allowing financial advisers and institutions in Europe to choose between traditional funds, separately managed accounts and ETFs depending on their needs.
The decision to enter Europe comes amid growing adoption of ETFs by both retail and professional investors. The funds’ low fees, liquidity and compatibility with financial technology platforms have driven record inflows across the continent. Active ETFs, though still a small share of the overall market, are expanding rapidly as asset managers seek to differentiate themselves from low-cost passive rivals.
Industry analysts say Dimensional’s reputation for systematic investing and its scale in the US ETF market could help it secure a meaningful presence in Europe, where the product range is still less developed. The firm’s entry also underscores how the globalisation of ETFs is reshaping competition among asset managers, as investors demand the same fund structures and pricing models across multiple regions.
If successful, the European launch could provide Dimensional with a new growth engine at a time when clients are seeking diversified, cost-effective ways to access global equity markets.