Six months after $518 billion asset manager Dimensional Fund
Advisors tried its hand at naming a new generation of
leadership, its facing its first test.
Eduardo Repetto, a 17-year veteran of Dimensional who had
served as the firms co-chief executive along with Dave Butler, announced yesterday that he
is resigning and will leave the firm in September. David Booth,
founder and executive chairman of Dimensional, says that while
Repettos announcement was a surprise to
everybody at the firm, he is confident that
Repettos successor, co-chief investment officer and head
of research Gerard OReilly, will be a strong
Repetto, who at one time was being groomed to succeed Booth
as CEO, doesnt have plans at this point, Booth tells
Institutional Investor. Im only speculating, but
hes worked incredibly hard his whole life, including long
hours and travel, says Booth. Maybe he wants to
spend more time with his family. OReilly will run
the firm with current co-CEO Butler and will join the
firms board of directors.
[II Deep Dive: Dimensional Fund Advisers Grapples With Its
Booth says Repetto helped lead the firm through a heady
period of growth. Dimensional, a pioneer in smart beta and factor-based investments,
boasts the third-fastest-growing U.S. mutual fund family, right
behind asset management giants Vanguard Group and BlackRock,
according to Boston Consulting Group.
Booth, a native Kansan and a basketball fan, compared
Repettos exit to that of coach Roy Williams leaving the
University of Kansas Jayhawks basketball team in 2003 for
the University of North Carolinas Tar Heels after leading
Kansas to the Final Four four times. People got outraged,
but wow, I said he gave us 15 great years. Lets be
thankful we had him, Booth says. People sometimes
Booth stresses that OReilly has the backing of the
University of Chicagos Gene Fama, who won the Nobel Prize
for his contributions to efficient market theories and still
teaches, and Kenneth French, Famas longtime research
partner and a finance professor at the Tuck School of Business
at Dartmouth College. Fama and French are also both directors
of Dimensional and work closely with the firms research,
investment, and client service teams and sit on its investment
policy team. Fama and French wrote a seminal paper in 1992 on
the sources of stock returns, which led to much of the academic
research behind factor-based investments.
Booth says it was important to find a successor who had Fama
and Frenchs stamp of approval. They could be a
potential stumbling block as were still a shop where
strategies are largely based on their work, says Booth.
Fama and French have total confidence in
When Repetto became co-CEO in 2010 when the firm
managed $165 billion in assets he had been the sole
designated successor to the CEO role. But given the firms
growth, Booth now feels the CEO role should be permanently
shared by two people with complementary skills.
Two is probably one more than many people think is
optimal, but its desirable in our industry, he
says. Booth explains that asset managers are really two
businesses, investments and client service. Repetto was more on
the investments side, while Butler built more of a resume
facing clients. OReilly will bring a career strong in
research and investments.
Booth said its unlikely the structure of the CEO role
had anything to do with Repettos departure. Repetto, he
said, had moved to Los Angeles and was commuting to Austin,
before that decision was made. He moved to L.A. long
before the co-CEO thing came along, he says.
The firms six-person executive committee will go on a
retreat on Thursday to determine the next head of research,
among other items.