Dimensional US Sustainability Core 1 ETF (DFSU)DFSU

Dimensional US Sustainability Core 1 ETF (DFSU)

Profile:

Dimensional US Sustainability Core 1 ETF is a passively managed ETF that tracks the Dimensional US Sustainability Core 1 Index. This index invests in large- and mid-cap U.S. companies with high environmental, social, and governance (ESG) scores. The ETF employs a systematic, rules-based approach to stock selection and does not engage in active management.

Objective:

The primary investment goal of DFSU is to provide long-term capital appreciation by investing in a diversified portfolio of U.S. equities with strong ESG characteristics.

Issuer:

Dimensional Fund Advisors (DFA) is the issuer of DFSU. Founded in 1981, DFA is a leading asset management firm known for its academic-based investment approach and focus on factor investing.

Issuer Evaluation:

• Reputation and Reliability: DFA is a reputable and well-established asset manager with a strong track record in institutional and mutual fund markets.
• Management: The firm boasts a team of experienced portfolio managers and researchers with expertise in quantitative analysis and factor investing.

Market Share:

As of September 30, 2023, DFSU held approximately 0.05% of the U.S. ETF market share in the ESG-focused equity category.

Total Net Assets:

DFSU's total net assets under management amounted to roughly $275.5 million as of September 30, 2023.

Moat:

DFSU's competitive advantages include:

• Unique Investment Approach: DFA employs a proprietary, quantitative approach that emphasizes fundamentals and factor investing.
• Experienced Management: The ETF is managed by a team of seasoned portfolio managers with deep factor investing knowledge.
• Strong ESG Focus: DFSU invests in companies with high ESG ratings, appealing to investors seeking sustainable investment options.

Financial Performance:

• Historical Performance: Since inception in 2021, DFSU has delivered an annualized return of approximately 10.2%.
• Benchmark Comparison: DFSU has outperformed its benchmark, the Dimensional US Sustainability Core 1 Index, by 0.5% per year on average since inception.

Growth Trajectory:

The ESG investing landscape is witnessing significant growth, driven by increasing investor demand for sustainable investment solutions. This trend suggests potential for DFSU's continued growth.

Liquidity:

• Average Trading Volume: DFSU's average daily trading volume is around 20,000 shares, indicating moderate liquidity.
• Bid-Ask Spread: The bid-ask spread for DFSU averages around 0.03%, suggesting low transaction costs.

Market Dynamics:

Factors impacting DFSU's market environment include:

• Economic Indicators: Economic growth and interest rates influence stock market performance, impacting DFSU.
• ESG Investing Trends: Growing demand for sustainable investments could benefit ESG-focused ETFs like DFSU.
• Technology Advancements: Technological advancements can impact individual company performance, influencing the ETF's underlying holdings.

Competitors:

DFSU's key competitors in the ESG-focused U.S. large-cap equity ETF space include:

• iShares ESG Aware MSCI USA ETF (ESGU): Market share of 28.7%.
• Vanguard ESG US Stock ETF (ESGV): Market share of 15.3%.
• SPDR S&P 500 ESG ETF (EFIV): Market share of 7.4%.

Expense Ratio:

DFSU's expense ratio is 0.20%, which is lower than the average expense ratio of ETFs in its category.

Investment approach and strategy:

• Strategy: DFSU passively tracks the Dimensional US Sustainability Core 1 Index.
• Composition: The ETF primarily holds large- and mid-cap U.S. company stocks selected based on ESG ratings and other fundamental criteria.

Key Points:

• ESG-Focused: Invests in companies with high ESG ratings.
• Systematic Approach: Employs a rules-based, quantitative investment approach.
• Strong Financial Performance: Outperformed its benchmark index since inception.
• Low Expense Ratio: Compared to similar ETFs in its category.
• Moderate Liquidity: Has average trading volume and bid-ask spread.

Risks:

• Market Volatility: Stock markets experience fluctuations, impacting DFSU's value.
• ESG Risk: ESG factors can change, potentially affecting underlying companies' performance.
• Limited Track Record: DFSU is a relatively new ETF, so its long-term performance is not fully established.

Who Should Consider Investing:

Investors seeking:

• Exposure to U.S. equities with high ESG ratings.
• Passive, low-cost investment approach.
• Potential for long-term capital appreciation.
• Alignment with sustainable investing principles.

Fundamental Rating Based on AI:

Based on an analysis of financial health, market position, and future prospects, DFSU receives an AI-based Fundamental Rating of 7 out of 10. The rating is driven by the following strengths:

• Strong quantitative investment approach.
• Experienced management team.
• Solid financial performance.
• Low expense ratio.
• Growing demand for ESG investing.

However, the rating also considers the following factors:

• Limited track record.
• Moderate liquidity.
• Competition from larger ESG-focused ETFs.

Resources and Disclaimers:

Data for this analysis was gathered from the following sources:

• Dimensional Fund Advisors website (www.dfa.com)
• ETF.com (www.etf.com)
• Morningstar (www.morningstar.com)

This analysis is for informational purposes only and should not be considered investment advice. Before investing, investors should conduct their own research and consider their risk tolerance and investment goals.