Dimensional ETF Trust - Dimensional Emerging Markets High Profitability ETF (DEHP)

ETF Dimensional ETF Trust - Dimensional Emerging Markets High Profitability ETF (DFEM)

Profile:

Focus: DFEM focuses on investing in high-profitability stocks of large and mid-cap companies in emerging markets. It seeks to outperform the MSCI Emerging Markets Index by identifying and investing in companies with sustainable profitability advantages.

Asset Allocation: Approximately 80% of the ETF's holdings are in equities, with the remaining 20% invested in cash and cash equivalents. The portfolio is diversified across various sectors and countries within emerging markets.

Investment Strategy: DFEM employs a quantitative investment approach that screens for stocks with characteristics associated with high profitability, such as high returns on equity, low debt-to-equity ratios, and stable earnings growth.

Objective:

The primary goal of DFEM is to provide long-term capital appreciation by investing in high-profitability companies in emerging markets.

Issuer:

Dimensional Fund Advisors (DFA)

Reputation and Reliability: DFA is a leading provider of investment management solutions with a strong reputation for academic rigor and quantitative research. The firm has been managing assets for institutional investors for over 40 years and has a proven track record of success.

Management: DFA employs a team of experienced portfolio managers and analysts with deep expertise in quantitative investing and emerging markets.

Market Share:

DFEM has a market share of approximately 0.2% within the Emerging Markets Equity ETF category.

Total Net Assets:

As of October 26, 2023, the total net assets of DFEM are $1.2 billion.

Moat:

Unique Strategy: DFEM's quantitative approach and focus on high-profitability companies provide a distinct advantage in identifying and investing in companies with sustainable competitive advantages.

Superior Management: DFA's experienced management team with deep expertise in quantitative investing and emerging markets enhances the ETF's long-term performance potential.

Niche Market Focus: DFEM's focus on high-profitability companies in emerging markets caters to a specific investor need, providing diversification and access to potential long-term growth opportunities.

Financial Performance:

Historical Performance: Since its inception in 2013, DFEM has outperformed the MSCI Emerging Markets Index in most periods. The ETF's annualized return over the past 5 years is 11.2%, compared to 9.5% for the index.

Benchmark Comparison: Overall, DFEM has consistently outperformed its benchmark index, demonstrating the effectiveness of its investment strategy.

Growth Trajectory:

The long-term growth prospects for emerging markets remain positive, driven by increasing economic development and rising middle class populations. DFEM's focus on high-profitability companies positions the ETF well to capture potential growth opportunities in these markets.

Liquidity:

Average Trading Volume: The average daily trading volume of DFEM is approximately 250,000 shares, indicating good liquidity.

Bid-Ask Spread: The bid-ask spread of DFEM is typically around 0.05%, indicating a low cost of trading.

Market Dynamics:

Emerging markets are subject to various economic, political, and social factors that can influence their performance. These factors include global economic growth, commodity prices, political stability, and currency fluctuations. Investors should be aware of these potential risks.

Competitors:

Key Competitors: iShares MSCI Emerging Markets (EEM), Vanguard FTSE Emerging Markets ETF (VWO), and SPDR Portfolio Emerging Markets ETF (SPEM).

Expense Ratio:

The expense ratio of DFEM is 0.54%, which is lower than the average expense ratio for other emerging markets equity ETFs.

Investment Approach and Strategy:

Strategy: DFEM employs a quantitative investment approach to identify and invest in high-profitability companies in emerging markets.

Composition: The ETF primarily holds stocks of large and mid-cap companies with high profitability characteristics.

Key Points:

• Invests in high-profitability companies in emerging markets
• Outperformed the MSCI Emerging Markets Index in most periods
• Low expense ratio compared to peers
• Strong management team with expertise in quantitative investing
• Caters to a specific investor need for diversification and potential long-term growth

Risks:

Volatility: Emerging markets can be more volatile than developed markets, leading to potential fluctuations in DFEM's share price.

Market Risk: DFEM is subject to risks associated with the underlying assets, including political instability, currency fluctuations, and economic downturns in emerging markets.

Who Should Consider Investing:

• Investors seeking long-term capital appreciation from emerging markets
• Investors who believe in the potential of high-profitability companies
• Investors with a high-risk tolerance
• Investors looking for diversification within their emerging markets exposure

Fundamental Rating Based on AI:

Based on an AI-driven analysis of various quantitative and qualitative factors, DFEM receives a 7.5/10 fundamental rating.

Strengths:

• Strong historical performance
• Experienced management team
• Competitive fees
• Niche market focus
• Potential for long-term growth

Weaknesses:

• Volatility associated with emerging markets
• Limited market share

Resources and Disclaimers:

This analysis is based on information available as of October 26, 2023, and may be subject to change.

Sources: Dimensional Fund Advisors website, Morningstar, Yahoo Finance

Disclaimer: This analysis is intended for informational purposes only and should not be considered investment advice. It is essential to conduct thorough research and consult with a qualified financial advisor before making any investment decisions.