Booth counts 80 firms behind the SEC petition that reopened the ETF share class

Dimensional has also been at the forefront of converting mutual funds into ETFs, Booth said, and he called that innovation related to the share class petition ^[10]. Those are changes to how a fund is packaged. The research inside is what a group of University of Chicago academics started the firm on ^[1], and what Booth and Rex Sinquefield have argued beats Wall Street intuition since the early 1980s ^[2]. His own summary of the result: "Between conversions and launches, we're now a top active ETF manager" ^[9].

The interview's editor's note dates the expiry of Vanguard's patent on the ETF share class to 2023 ^[8]. The patent and the SEC relief are separate gates, and on Booth's count the structure was one firm's for roughly three decades before the second one opened ^[19].

In my view Dimensional is competing on packaging while telling clients that packaging is not where returns come from. Booth says both halves out loud. "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," he said ^[6]. He expects the growth on the ETF side to continue ^[18].

The interview does not break out how much of the $1.1 trillion sits in ETFs ^[20]. That number would decide whether conversions are moving existing clients into a cheaper tax treatment or pulling in new money, and until someone publishes it the case for the wrapper as the competitive front rests on where a research house has been spending its regulatory effort. If most of the roughly 80 petitioners file for the class and never gather assets in it, the relief was an option and manager selection goes back to fees and research ^[7].

Booth was cooler on the other kind of product innovation. The Daily Upside asked him about the pace of filings for products built to be traded intraday and themes akin to gambling ^[14]. "In my 57 years in this business, if there's one common theme to all the bankruptcies and catastrophes that've come up, it's leverage of some form," he said ^[12]. He added that there is nothing wrong with leverage in itself as long as it is reasonable and managed carefully, and that he hopes investors getting into these products understand that ^[13]. Some of them, he said, enjoy the gambling aspect, and for those a small exposure to products they understand is probably fine ^[15].

The firm also paid for a film. Errol Morris made a documentary about Dimensional's founding, published last year with the firm's funding, and it has more than 32 million views on YouTube ^[16]. "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," Booth said ^[17].