Commentary on Pensions & Investments articles by Randy Diamond
Dimensional Fund Advisors, co-founded by David Booth in 1981, plans to hire hundreds of new employees as the company plans to expand is defined contribution business, according to Pensions & Investments.
Planning for the Long Haul
The company intends to boost its employee ranks by up to 800 people, in addition to the 1,200 it already employs, according to the publication. In addition, Austin, Texas-based Dimensional is building a 282,000-square-foot office building in Charlotte, N.C., Pensions & Investments writes.
The firm has already grown from $50 billion in assets under management in 2004 to more than $500 billion as of April 24, according to the publication. But the addition of the new employees could see Dimensional cross the $1 trillion threshold, Gerard O'Reilly, the company’s co-chief investment officer and head of research, tells Pensions & Investments.
With the new complex in Charlotte, Dimensional is aiming at long-term growth, according to the publication. Booth tells Pensions & Investments that the firm decided to build enough space because it will likely have 2,000 employees in 10 years. The new building is slated for completion late next year, according to the publication. Booth has stepped away from his role as CEO of Dimensional in February but remains it chief executive chairman, Pensions & Investments writes.
Dimensional is also focused on growing its defined contribution business, which had $47 billion under management as of the end of last year, according to the publication. The firm also got into target-date funds in 2015 and now offers 13 of them, and they have $479 million assets under management as of March 31, according to Dimensional data cited by Pensions & Investments.
The company’s target-date funds differ from the competition in one important respect, the publication writes. While like most funds Dimensional’s offerings favor growth and income assets in the early stage, as investors approach retirement, the firm's target-date funds invest up to 75% of the assets in Treasury inflation-protected securities, according to Pensions & Investments.
Dimensional’s competitors, meanwhile, invest on average about 10% of the assets in TIPS, the publication writes. The company’s challenge is to persuade plan sponsors and investors that its approach to target-date investing is better, Jeff Holt, associate director of manager research at Morningstar, tells Pensions & Investments.
Source: Pensions & Investments Online article 1 and article 2
Posted by: The Wealth Advisor
