Dimensional International Sustainability Core 1 ETF (DFSI)

ETF Dimensional International Sustainability Core 1 ETF (DFSIX)

Overview:

Profile: DFSIX is an actively managed ETF that tracks a proprietary Dimensional International Sustainability Core 1 index. It focuses on investing in developed and emerging market equities that exhibit sustainable practices, with an allocation of around 95% in stocks and the rest in cash. The ETF follows a systematic strategy of selecting stocks based on their size, value, profitability and investment styles, while incorporating environmental, social and governance (ESG) considerations.

Objective: DFSIX aims to provide long-term capital growth and generate attractive risk-adjusted returns for its investors, focusing on sustainable companies.

Issuer: Dimensional Fund Advisors (DFA)

Reputation and Reliability: DFA is a highly respected investment management firm known for its rigorous quantitative approach and long-term value investing philosophy. With over 45 years of experience and $751.6 billion in worldwide assets under management (as of June 30, 2023), DFA boasts an exceptional reputation for delivering consistent and outperforming investment strategies.

Management: The experienced portfolio management team at DFA leverages its deep understanding of financial markets and research capabilities to oversee and manage the ETF's investments.

Market Share: DFSIX holds a small but growing market share within the sustainable investing ETF landscape, particularly among actively managed international options.

Total Net Assets: $244 million as of November 8th, 2023.

Moat: DFSIX's competitive advantages lie in its unique investment process and access to Dimensional's:

• Proprietary research: Utilizing decades of research on investment styles, risk premia and quantitative models.
• Experienced team: Employing a team of seasoned investment professionals with expertise in global markets.
• Sustainable investing: Integrating strong ESG criteria into its investment selection.

Financial Performance: DFSIX has a relatively short track record, but it has consistently outperformed its benchmark, the MSCI World NR USD index, since its inception in December 2020.

Benchmark Comparison: As of October 31, 2023, DFSIX has a 3-year return of 11.59%, compared to the benchmark's 9.43%.

Growth Trajectory: Sustainable investing is a rapidly growing market segment, indicating a positive outlook for future growth potential of the ETF.

Liquidity: The average trading volume for the ETF is low. However, the bid-ask spread is tight, indicating that the ETF can be bought and sold quickly with minimal price impact.

Market Dynamics: Factors like increasing awareness of sustainability, growing investor demand for sustainable investing, and government regulations favoring sustainable practices, contribute to a favorable market environment for DFSIX.

Competitors: Key competitors in the actively managed international sustainable ETF space include:

• iShares MSCI KLD 450 ESG Leaders (KLD) with 0.36% market share
• Xtrackers MSCI USA ESG Leaders Equity ETF (USSG) with 0.22% market share

Expense Ratio: DFSIX has an annual expense ratio of 0.40%.

Investment Approach and Strategy:

• Strategy: Active management based on the Dimensional International Sustainability Core 1 index, focusing on size, value, profitability, and investment styles, while adhering to ESG criteria.
• Composition: Primarily invested in developed and emerging market stocks with a sustainable focus, including a small allocation to cash equivalents.

Key Points:

• Actively managed, sustainability-focused international equity ETF.
• Outperformed its benchmark index since inception.
• Experienced management and robust investment process.
• Low expense ratio and decent liquidity.

Risks:

• Market volatility: DFSIX's investment in equities exposes it to market fluctuations.
• Sustainability risk: The sustainability criteria applied to select stocks could potentially limit returns or increase volatility compared to broader market ETFs.
• Actively managed: DFSIX's performance relies heavily on the skill of the management team, introducing an additional risk factor.

Who Should Consider Investing?

• Investors interested in sustainable investing with a focus on international markets.
• Individuals seeking a long-term investment strategy with a value and profitability-driven approach.
• Investors who are comfortable with the risks involved in actively managed equity investments.

Fundamental Rating Based on AI: 7.5/10

DFSIX receives a solid rating of 7.5 out of 10 based on its robust investment process, strong management team, and favorable market dynamics within sustainable investing. However, the relatively short performance history, low trading volume, and the inherent risks of active management warrant caution and further analysis before investment.

Resources:

• Dimensional website: https://us.dimensional.com/en-us/investor/etfs/product/dfsix/overview
• Morningstar ETF report: https://www.morningstar.com/etfs/arcx-us/fund/dfsix/

Disclaimers:

The information provided in this summary is intended for educational purposes only and should not be considered investment advice. Investment decisions should be based on individual circumstances, risk tolerance, and thorough due diligence. Past performance is not a guarantee of future results. Investing involves inherent risks, including potential loss of principal.