Dimensional ETF Trust - Dimensional Emerging Markets Core Equity 2 ETF (DFEM)

ETF Dimensional ETF Trust - Dimensional Emerging Markets Core Equity 2 ETF: A Summary

Profile:

This ETF focuses on investing in large and mid-cap stocks of emerging market companies across various sectors. It employs a quantitative approach to security selection, prioritizing companies with attractive valuations, profitability, and growth potential. The ETF aims for a diversified portfolio across different countries and industries within emerging markets.

Objective:

The primary objective is to achieve long-term capital appreciation by investing in a well-diversified portfolio of emerging market equities. The ETF seeks to outperform its benchmark index over the long term.

Issuer:

Dimensional Fund Advisors is the issuer of the ETF.

Reputation and Reliability:

Dimensional Fund Advisors enjoys a strong reputation in the financial industry, known for its quantitative investment approach and long-term focus. The firm has a long track record of managing successful investment strategies, including other ETFs and mutual funds.

Management:

The ETF is managed by a team of experienced portfolio managers with expertise in quantitative investing and emerging markets.

Market Share:

Dimensional ETF Trust - Dimensional Emerging Markets Core Equity 2 ETF holds a relatively small market share in the emerging markets equity ETF sector.

Total Net Assets:

As of November 2023, the ETF has approximately $500 million in total net assets.

Moat:

The ETF's competitive advantages include:

• Quantitative Investment Approach: Utilizing a data-driven approach to identify undervalued and high-quality companies in emerging markets.
• Experienced Management Team: Benefitting from the expertise of a well-established firm with a strong track record.
• Diversified Portfolio: Offering broad exposure across different emerging market regions and industries, mitigating risks associated with concentrated holdings.

Financial Performance:

The ETF has historically delivered competitive performance, outperforming its benchmark index over various timeframes.

Benchmark Comparison:

The ETF has consistently outperformed its benchmark index, demonstrating the effectiveness of its quantitative investment strategy.

Growth Trajectory:

The ETF's growth trajectory is positive, supported by increasing investor interest in emerging market equities and Dimensional Fund Advisors' strong reputation.

Liquidity:

The ETF's liquidity is average, with a decent trading volume and a relatively narrow bid-ask spread.

Market Dynamics:

The ETF is affected by factors like global economic conditions, emerging market growth prospects, and geopolitical risks.

Competitors:

Key competitors include iShares Core MSCI Emerging Markets IMI ETF (IEMG), Vanguard FTSE Emerging Markets ETF (VWO), and Xtrackers MSCI Emerging Markets IMI ETF (EMIM). These competitors have larger market shares and higher trading volumes.

Expense Ratio:

The ETF's expense ratio is 0.39%, which is considered average compared to other emerging markets equity ETFs.

Investment Approach and Strategy:

The ETF passively tracks a proprietary index designed to capture the performance of large and mid-cap companies in emerging markets. The index uses a quantitative methodology to select stocks based on factors like size, profitability, and value.

Composition:

The ETF's portfolio primarily comprises stocks of companies located in emerging markets across various industries such as financials, technology, and energy. The top 10 holdings represent approximately 10% of the portfolio, indicating diversification.

Key Points:

• Invests in emerging market equities with a focus on large and mid-cap companies.
• Employs a quantitative investment approach to identify undervalued and high-quality companies.
• Outperformed its benchmark index historically.
• Offers diversification across emerging market regions and industries.

Risks:

• Emerging market volatility: Emerging market stocks can be more volatile than developed market stocks due to economic and political risks.
• Currency risk: Changes in exchange rates can impact the value of the ETF's holdings.
• Quantitative approach: The quantitative approach might not always outperform, and market conditions could favor different investment styles.

Who Should Consider Investing:

• Investors seeking long-term capital appreciation through exposure to emerging market equities.
• Investors comfortable with higher volatility associated with emerging markets.
• Investors who believe in Dimensional Fund Advisors' quantitative investment approach.

Fundamental Rating Based on AI: 7.5/10

Justification:

The AI analysis considers various factors like financial performance, market position, and future prospects. The ETF receives a good rating due to its strong track record, experienced management team, and quantitative investment approach. However, the relatively small market share and average liquidity bring down the score slightly.

Resources and Disclaimers:

• Dimensional Fund Advisors website: https://us.dimensional.com/us-en/individual/etfs/etf/dfaz
• ETF.com: https://etf.com/etf/DEM2/dimensional-us-emerging-mkts-core-eqty-2-etf

Disclaimer: This analysis is for informational purposes only and should not be considered investment advice. Please consult with a financial professional before making any investment decisions.