Dimensional Fund Advisors has launched four new actively managed equity ETFs which seek to systematically harvest factor risk premia within developed markets outside of the US.
Dave Butler, co-CEO of Dimensional Fund Advisors.
Listed on Cboe BZX Exchange, the four ETFs provide diversified exposure to broad market, large-cap profitability, small-cap, and small-cap value equity segments.
Within each of these segments, Dimensional uses clearly defined quantitative rules to apply modest portfolio tilts away from conventional market cap weights based on targeted factor exposures.
Each ETF is designed to emphasize multiple long-term drivers of expected returns while balancing risk through broad diversification across countries, sectors, and companies.
Specifically, the funds deliver broad exposure to their respective universes while tilting weights in favour of companies with smaller size, lower relative value (based on price to book value, price to cash flow, or price to earnings), and higher profitability (based on earnings to book value or profits to book value) characteristics.
Dave Butler, co-CEO of Dimensional Fund Advisors, said: “Recent volatility has demonstrated the continued value of broadly diversified portfolios with added flexibility as well as experienced advisors to help keep investors aligned with their financial plans. The active transparent ETF industry remains relatively nascent, and we believe our approach, which builds on the core principles of indexing by incorporating flexible, daily implementation, will continue to attract investors that believe in investing for the long term.”
Gerard O’Reilly, co-CEO and CIO of Dimensional Fund Advisors, added: “For decades, Dimensional has implemented our systematic approach in international equity markets through low-cost, broadly diversified strategies. Now we are delivering these time-tested core and component strategies within ETFs. Efficiently managing costs, controlling risks, and managing tax impacts are crucial when investing across thousands of securities in international markets. Our flexible investment approach is focused on delivering those results and adding further value over traditional active investing and passive indexing solutions.”
The ETFs
Dimensional has agreed to waive a portion of the funds’ management fees until at least March 2023.
The Dimensional International Core Equity 2 ETF (DFIC US) has come to market with $50m in assets. It has a net expense ratio of 0.23% and a gross expense ratio of 0.28%.
The Dimensional International High Profitability ETF (DIHP US) has come to market with $20m in assets. It has a net expense ratio of 0.29% and a gross expense ratio of 0.33%.
The Dimensional International Small Cap ETF (DFIS US) has come to market with $15m in assets. It has a net expense ratio of 0.39% and a gross expense ratio of 0.47%.
The Dimensional International Small Cap Value ETF (DISV US) has come to market with $25m in assets. It has a net expense ratio of 0.42% and a gross expense ratio of 0.51%.