Dimensional Amends ETF Share Class Application Clarifies Board Role

On May 29, Dimensional Fund Advisors filed a newly amended dual share class application with the Securities and Exchange Commission (SEC). In the filed amendments from April 4, the board would need to monitor (on an ongoing basis) a prescriptive list of items with certain numerical thresholds with respect to brokerage expenses, cash levels, and capital gains.  In that application, if the thresholds were breached, the board would then need to determine if remediation were necessary. The amendments from May 29, instead require the advisor to provide an assessment to the board of the breached thresholds and then provide remediation recommendations for the board to consider. Additionally, the revised application removes some of the prescriptive information that the board would have to be given in what appears to be an attempt to better equip the board to exercise its oversight rather than management.  According to an Ignites article, “last week's amendment streamlines sections that describe the initial evaluation and approval process, the ongoing monitoring process and the ongoing board approval process, according to an analysis of the new and old filing.” Industry experts believe exemptive relief is likely to be granted in the near term, although there is no set timeline. MFDF plans to host a webinar update once the SEC grants relief.

Click here to read the recently amended application on the SEC website.