He doesn't get as much media attention as Larry Fink or Bill Ackman, but David Booth, chairman of Dimensional Fund Advisors, has played a foundational role in the creation of the modern asset management industry. Working alongside Rex Sinquefield since the early 1980s, Booth has championed the idea that academic research is superior to Wall Street intuition. During that time, Dimensional has grown from a fledgling business operating out of a spare room of Booth's Brooklyn brownstone to a global investment manager with $1.1 trillion in assets under management.
He's no longer running the company, having passed the reins to current co-CEOs Dave Butler and Gerard O'Reilly, but Booth is still intimately involved in setting Dimensional's direction at a time when innovation in the exchange-traded fund market and related trends are driving another sea change in how professional portfolios are built. stocks. READ ALSO: Your Client's Big Tech Company Just IPO'd. Now What? and Investors Need Real Talk About Interval Funds We sat down with Booth at Nasdaq's headquarters in New York (a fitting location given the important historical links between the firms) to get his take on a number of hot topics affecting financial advisors and their clients today.
Dimensional's foundation story and growth were the subject of a feature film funded by the firm and published last year by the Academy Award-winning documentary filmmaker Errol Morris. Does it surprise you that the film has notched more than 32 million views on YouTube? Yeah, that's really something.
It's gratifying, because our goal with the movie was also about helping more people better understand the financial markets, asset managers and how investing actually works. If they do, then they'll feel better about participating in the market and will be better able to meet their long-term objectives, so reaching that many people was fantastic. How are you thinking about innovation in the ETF market today?
ETFs have been a big part of Dimensional's run to $1 trillion. Where's the market heading? Should mutual fund managers be worried?
Neither is inherently superior, mutual funds or ETFs, but it's undeniable that ETFs have some big advantages, starting with the tax efficiency, and the proliferation of active products has just been huge in recent years. So yes, you are seeing tremendous growth on the ETF side and I expect that will continue. The proliferation of ETF share classes is something we've been intimately involved in.
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