Dimensional change

A family of funds associated with some of the world’s most famous economists has created a buzz in the market. But the funds are sold without upfront sales charges and do not pay trailers, which does not suit the business model of most local distributors.

Financial advisers often say it is hard to find actively managed funds that consistently beat their benchmarks. Finding one that does so without high costs is even harder. That is why a growing number have been gravitating towards exchange-traded funds (ETFs) or passively managed funds that simply aim to track a market index. In effect, these funds do not aim to achieve “excess returns”, or what is commonly known as alpha. Instead, they aim to match the market’s beta at the lowest possible cost.

Now, some local financial advisers have been talking about a range of funds run by a firm with links to some of the world’s leading financial minds that aims to consistently generate alpha in a cost-effective manner. The firm is US-based Dimensional Fund Advisors, which opened an office in Singapore in January 2013 to broaden its global footprint and serve a region with fast-rising levels of wealth.

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