The new ETF originally existed as a limited partnership created at the end of 2011. That private fund used the same index methodology as its successor ETF, and generated annualized returns over three years (through year-end 2014) of 20.87 percent versus 20.41 percent for the S&P 500 index.
Dillon says they decided to convert the private fund into its new iteration because its passive bent works well as an ETF. That, and it gives Diamond Hill experience with ETFs and sets the stage for potentially expanding into the space with offerings based on its active-fund strategies if and when regulators open the door for non-transparent, active-strategy ETFs.
This strategy [the new ETF] lets us learn a lot about the ETF world,” Dillon says.