Dimensional launches enhanced emerging markets ETF

Dec 4th, 2020 | By | Category: Equities

Dimensional Fund Advisors has introduced an emerging markets ETF that utilizes active management in a bid to provide enhanced returns compared to a purely passive index-based approach.

Gerard O’Reilly, co-CEO and Chief Investment Officer, Dimensional Fund Advisors

Gerard O’Reilly, co-CEO and Chief Investment Officer, Dimensional Fund Advisors.

The Dimensional Emerging Core Equity Market ETF (DFAE US) has listed on NYSE Arca and comes with an expense ratio of 0.35%.

Dimensional’s approach, driven by clearly defined quantitative rules, employs modest portfolio tilts away from conventional market cap-weights based on size, value, and profitability factors.

The new fund is benchmarked against the MSCI Emerging Markets IMI Index, although the ETF’s prospectus notes that it may also invest in frontier market securities.

Gerard O’Reilly, co-CEO and Chief Investment Officer, Dimensional Fund Advisors, said, “We believe that our approach to systematic investing, using a flexible daily process based on rigorous research, offers investors a compelling alternative to existing active and index-based ETFs.”

The fund complements Dimensional’s first two ETFs which debuted last month, also on NYSE Arca. The Dimensional US Core Equity Market ETF (DFAU US) comes with an expense ratio of 0.12%, while the Dimensional International Core Equity Market ETF (DFAI US) costs 0.18%.

These funds offer broadly diversified all-cap exposure to US and global developed ex-US equity markets, respectively.

The quant giant, which currently manages over $500 billion in assets under management, has also revealed plans to convert six tax-managed mutual funds to ETFs early next year.

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