We are happy to advise that Dimensional has announced a reduction in fund management fees for several of their funds. These fees are paid from the fund's assets and are reflected by the fund price. Effectively this means the performance of the funds will be enhanced by the fee reduction moving forward.

Dimensional released the statement below with regards to the reduction in fund management fees.

Dimensional is pleased to announce a reduction in management fees for 14 of the Dimensional Wholesale Trusts, effective 2 March 2020. The reduction in management fees applies to more than half of the assets invested in the Dimensional Wholesale Trusts. 

Australian CEO Glenn Crane said, “We evaluate the management fees for our trusts on a regular basis and when appropriate, we make adjustments.” 

The fee reductions apply across many of Dimensional’s most widely held Trusts, including the Core Equity, World Allocation, Sustainability and Large Company Trusts.

As a systematic active manager, Dimensional is among the most competitively priced managers in the Australian market and even prior to these latest changes was ranked by third party researchers as in the bottom quartile for fees across most fund categories it offers. 

“We expect to do better than benchmarks and peers, after fees, so we fight for every basis point,” noted Gerard O’Reilly, Global Co-CEO and CIO of Dimensional. “We continue to gain insights from research and innovate across all aspects of our process.”

The following table lists the funds with fee reductions.

The reduction in fees for the Australian Core Equity and Global Core Equity trusts will benefit all clients. Together these two trusts make up 70% of the shares in our model portfolios. Clients with more aggressive portfolios will therefore benefit the most.

It is also worth noting the relatively large reduction in fees for the sustainability trusts. For those who have opted for these trusts, the fees have become comparable to the core trusts. For the model portfolios, substituting the sustainable alternatives raises the total management fees by about 0.02% p.a. whereas previously the difference was 0.04%.

A balanced portfolio, with 60% invested in shares, has fund management fees of 0.38% p.a. Substituting in the sustainable fund options raises this to 0.40% p.a.

While this drop in fees came as a pleasant suprise, we are always looking at ways to improve outcomes for clients and reducing the costs to doing so.