Dimensional launches three factor-enhanced bond ETFs

Nov 15th, 2023 | By | Category: Fixed Income

Dimensional Fund Advisors has bolstered its suite of transparent actively managed ETFs that harvest factor risk premia within global bond markets.

Dimensional launches three active factor-enhanced bond ETFs

Dimensional has rolled out a trio of new factor-enhanced fixed income ETFs.

The new listings, which increase the number of Dimensional factor-enhanced fixed income ETFs to ten, are core portfolio funds that provide exposure to global corporate, global aggregate, and global ex-US aggregate bond markets.

Instead of trying to outguess these markets or time interest rates, the funds aim to systematically capture factor risk premia while controlling risk relative to broad market benchmarks.

Specifically, the funds seek to capture credit premia, the expected incremental return from investing in securities with greater credit risk compared to US Treasuries, and term premia, the expected relative return from investing in longer-dated securities compared to shorter-dated securities, when these factors are perceived to be favourable.

The funds

The Dimensional Global Credit ETF (DGCB US) invests in corporate debt issued worldwide with at least 30% of the portfolio dedicated to bonds from non-US issuers. The fund comes with an expense ratio of 0.20%.

The Dimensional Global Core Plus Fixed Income ETF (DFGP US) covers a wide opportunity set spanning government, corporate, government-related, and securitized bonds from issuers worldwide. Both investment-grade and high yield securities are eligible for the portfolio. The strategy maintains a weighted average duration of no more than a half year greater than, and no less than one year below, the weighted average duration of the benchmark Bloomberg Global Aggregate Bond Index. The fund’s expense ratio is 0.22%.

Lastly, the Dimensional Global ex-US Core Fixed Income ETF (DFGX US) follows a similar strategy as above but invests only in issuers located outside of the US with a focus on developed markets. The fund’s expense ratio is 0.20%.

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