Dimensional Rolls Out 3 Emerging Market ETFs

April 27, 2022

Today, Dimensional Funds added three actively managed ETFs focused on developing markets to its lineup. The funds and their expense ratios are as follows: 

All three list on the NYSE Arca exchange. 

Dimensional already offers the $855 million Dimensional Emerging Core Equity Market ETF (DFAE), which launched in December 2020 and has an expense ratio of 0.35%, 4 basis points cheaper than DFEM, which has a similar objective in that it invests in companies exhibiting smaller capitalization, lower relative price and higher profitability. However, DFEM offers more focused exposure to the targeted factors.  

“You can expect more small cap exposure, more value exposure and more profitability exposure,” said Anthony Caruso, co-head of product specialists at Dimensional Fund Advisors.  

“We take a systematic approach at Dimensional, but we're leaning in more toward those segments with higher expected return,” he explained. “What you could expect is more risk but higher expected return as you go to ‘Core 2,’ so that's why there's a difference in fees.” 

Meanwhile, DFEV primarily invests in emerging market equities deemed to be low priced. The Emerging Markets Value Portfolio (I), a similar strategy in a mutual fund wrapper, has an expense ratio of 0.45%. It has outperformed its primary benchmark in five of the last 10 calendar years and on an annualized basis over the one-, three-, five- and 10-year periods.  

“This is the same type of approach that we take within emerging markets value strategy, the idea behind it is being able to provide investors with choice,” Caruso added. 

DEHP targets larger emerging market companies that exhibit high profitability relative to other companies in the same country or region, according to its prospectus. The fund is an entirely new strategy that Dimensional launched based on customer demand, Caruso notes.  

The new launches bring the total number of Dimensional ETFs to 23 funds, with total assets under management in its ETFs at $47 billion. Dimensional Fund Advisors launched its first ETFs in November 2020.  

 

Contact Heather Bell at [email protected] 

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