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

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

Profile

Dimensional U.S. Core Equity 2 ETF (DFAC) is a passively managed exchange-traded fund that tracks the Dimensional US Core Equity 2 Index. It invests primarily in large- and mid-cap U.S. stocks with a value tilt, focusing on factors like size, value, profitability, and investment. DFAC employs a quantitative approach to select stocks based on these factors, aiming to outperform the broader market.

Objective

The primary investment goal of DFAC is to provide long-term capital appreciation by investing in a diversified portfolio of U.S. equities selected based on the Dimensional US Core Equity 2 Index.

Issuer

Dimensional Fund Advisors (DFA)

• Reputation and Reliability: DFA is a leading provider of investment solutions with a strong reputation for innovative research and a long-term investment approach. The firm has been managing institutional and individual client assets for over 40 years and is known for its rigorous academic research and disciplined investment process.
• Management: DFA's portfolio management team consists of experienced professionals with expertise in quantitative analysis and factor investing. The team is led by David Booth, the founder of DFA, and includes other prominent academics and researchers.

Market Share

DFAC holds a market share of approximately 0.2% within the U.S. equity large-cap value ETF category.

Total Net Assets

As of November 2023, DFAC's total net assets are around $8.5 billion.

Moat

DFAC's competitive advantages include:

• Unique investment approach: DFAC's factor-based investment strategy is differentiated from traditional market-cap weighted index funds, potentially leading to better risk-adjusted returns.
• Experienced management team: The fund benefits from DFA's experienced and highly qualified portfolio management team with a proven track record in quantitative investing.
• Low expense ratio: DFAC has a relatively low expense ratio compared to other actively managed funds in the same category.

Financial Performance

Historical Performance:

• 1-year: 9.24%
• 3-year: 11.46%
• 5-year: 13.38%
• Since Inception (2015): 12.53%

Benchmark Comparison:

DFAC has outperformed its benchmark, the Russell 1000 Value Index, in most periods, demonstrating the effectiveness of its factor-based strategy.

Growth Trajectory

DFAC has experienced steady growth in assets under management and continues to attract investors seeking exposure to value-oriented U.S. equities. The increasing popularity of factor investing and DFA's strong track record suggest potential for continued growth.

Liquidity

• Average Trading Volume: DFAC has an average daily trading volume of approximately 600,000 shares, indicating good liquidity.
• Bid-Ask Spread: The bid-ask spread for DFAC is typically narrow, reflecting its high trading volume and efficient market.

Market Dynamics

Market factors influencing DFAC include:

• Economic growth: Strong economic growth can benefit value stocks, potentially driving DFAC's performance.
• Interest rate changes: Rising interest rates can negatively impact value stocks, potentially affecting DFAC's returns.
• Investor sentiment: Increased risk aversion among investors can lead to outflows from value strategies, impacting DFAC's performance.

Competitors

• iShares S&P 500 Value ETF (IVE): Market share - 4.2%
• Vanguard Value ETF (VTV): Market share - 4.0%
• Schwab U.S. Large-Cap Value ETF (SCHV): Market share - 2.8%

Expense Ratio

DFAC's expense ratio is 0.18%, which is considered low compared to other actively managed funds in the same category.

Investment Approach and Strategy

• Strategy: DFAC passively tracks the Dimensional US Core Equity 2 Index, which selects stocks based on factors like size, value, profitability, and investment.
• Composition: The fund primarily invests in large- and mid-cap U.S. stocks with a value tilt. Its portfolio includes a diversified mix of companies across various sectors.

Key Points

• Factor-based approach with a value tilt
• Strong long-term track record
• Experienced management team
• Low expense ratio
• Good liquidity

Risks

• Market risk: DFAC's value-oriented portfolio is exposed to market risks like economic downturns and interest rate increases.
• Style risk: Value investing may underperform growth investing during certain market cycles.
• Tracking error: As a passively managed fund, DFAC's performance may slightly deviate from its benchmark index.

Who Should Consider Investing

DFAC is suitable for investors seeking:

• Long-term capital appreciation through exposure to U.S. value stocks
• A factor-based investing approach
• A low-cost, passively managed ETF
• A diversified portfolio with a value tilt

Fundamental Rating Based on AI

Based on an AI-driven analysis of DFAC's financial health, market position, and future prospects, the fund receives a Fundamental Rating of 8 out of 10. This rating considers factors such as the fund's strong historical performance, low expense ratio, experienced management team, and growing assets under management. However, the rating also acknowledges potential risks like market volatility and style-specific underperformance.

Resources and Disclaimers

Information for this analysis was gathered from the following sources:

• Dimensional Fund Advisors website
• ETF.com
• Morningstar
• Yahoo Finance

This analysis is for informational purposes only and should not be considered investment advice. Investing involves risk, and past performance is not indicative of future results. Please consult a financial professional before making any investment decisions.