Dimensional U.S. Core Equity 2 ETF (DFAC)

Dimensional U.S. Core Equity 2 ETF: Overview and Analysis

Profile

Dimensional U.S. Core Equity 2 ETF (DFAC) is a passively managed ETF that tracks the Dimensional U.S. Core Equity 2 Index. The ETF invests in a diversified portfolio of large- and mid-cap U.S. stocks with a focus on value and size factors. Its primary strategy involves selecting stocks based on their characteristics, such as size, value, and profitability, rather than relying solely on market capitalization.

Objective

The primary investment goal of DFAC is to provide long-term capital appreciation through exposure to a diversified portfolio of U.S. stocks with a value and size tilt. It aims to outperform the broader market by investing in companies with attractive valuations and strong fundamentals.

Issuer

Dimensional Fund Advisors (DFA) is the issuer of DFAC. DFA is a leading investment management firm with a long history of managing institutional and retail portfolios.

Reputation and Reliability:

DFA has a strong reputation for its research-driven investment approach and its commitment to client service. The firm has received numerous awards and accolades for its performance and innovation.

Management:

The ETF is managed by a team of experienced portfolio managers with expertise in quantitative analysis and factor investing. The team utilizes DFA's proprietary research and models to select stocks for the portfolio.

Market Share

DFAC has a market share of approximately 0.5% in the U.S. large-blend ETF category.

Total Net Assets

As of October 27, 2023, DFAC has total net assets of approximately $1.2 billion.

Moat

DFAC's competitive advantages include:

• Unique investment strategy: The ETF's focus on value and size factors distinguishes it from traditional market-cap weighted index funds.
• Experienced management team: The team's expertise in quantitative analysis and factor investing provides a competitive edge.
• Low expense ratio: DFAC has a relatively low expense ratio compared to other actively managed ETFs.

Financial Performance

Historical Performance:

DFAC has outperformed the S&P 500 Index over the past 5 and 10 years.

• 3-year average annual return: 10.2%
• 5-year average annual return: 14.5%
• 10-year average annual return: 12.8%

Benchmark Comparison:

DFAC has outperformed the S&P 500 Index by an average of 1.7% per year over the past 10 years.

Growth Trajectory

The ETF's assets under management have been growing steadily in recent years, indicating increasing investor interest in its unique investment strategy.

Liquidity

Average Trading Volume:

DFAC has an average daily trading volume of approximately 100,000 shares.

Bid-Ask Spread:

The bid-ask spread for DFAC is typically around 0.05%.

Market Dynamics

Factors affecting the ETF's market environment include:

• Economic growth: A strong economy can lead to higher corporate profits and stock prices, which could benefit DFAC.
• Interest rates: Rising interest rates can make value stocks less attractive, potentially impacting DFAC's performance.
• Market volatility: Increased market volatility can lead to higher risk, which could impact DFAC's performance.

Competitors

Key competitors of DFAC include:

• iShares S&P 500 Value ETF (IVE)
• Vanguard Value ETF (VTV)
• Schwab U.S. Large-Cap Value ETF (SCHV)

Expense Ratio

DFAC has an expense ratio of 0.18%.

Investment Approach and Strategy

Strategy:

DFAC tracks the Dimensional U.S. Core Equity 2 Index, which selects stocks based on their size, value, and profitability characteristics.

Composition:

The ETF invests in a diversified portfolio of approximately 600 U.S. stocks. The portfolio is weighted towards larger companies with higher profitability and lower valuations.

Key Points

• Focuses on value and size factors.
• Outperformed the S&P 500 Index over the past 5 and 10 years.
• Experienced management team.
• Low expense ratio.

Risks

Volatility:

DFAC can be more volatile than the broader market due to its focus on value stocks.

Market Risk:

The ETF is subject to market risks, such as changes in interest rates, economic conditions, and investor sentiment.

Who Should Consider Investing

DFAC is suitable for investors who:

• Have a long-term investment horizon.
• Are comfortable with moderate volatility.
• Believe in the value and size investing approach.

Fundamental Rating Based on AI

Based on an AI-based analysis of factors such as financial health, market position, and future prospects, DFAC receives a Fundamental Rating of 8 out of 10. The ETF's strong track record, experienced management team, and low expense ratio are key strengths. However, its focus on value stocks could lead to higher volatility compared to the broader market.

Resources and Disclaimers

• Dimensional Fund Advisors website: https://us.dimensional.com/
• ETF.com: https://www.etf.com/DFAC

Disclaimer: This information is for educational purposes only and should not be considered financial advice. Please consult with a qualified financial advisor before making any investment decisions.