Dimensional unveils three new emerging market multi-factor ETFs

May 4th, 2022 | By | Category: Equities

Dimensional Fund Advisors has launched three new emerging market equity ETFs that seek enhanced returns by harvesting multiple factor risk premia.

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

Gerard O’Reilly, co-CEO and CIO of Dimensional Fund Advisors

Listed on NYSE Arca, the three ETFs target initial universes consisting of broad market, broad market value-oriented, and large-cap high profitability stocks.

They are the Dimensional Emerging Markets Core Equity 2 ETF (DFEM US), which comes with an expense ratio of 0.39%; the Dimensional Emerging Markets Value ETF (DFEV US), which has an expense ratio of 0.43%; and the Dimensional Emerging Markets High Profitability ETF (DEHP US), which costs 0.41%.

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.

Dimensional’s suite of systematic factor ETFs now comprises 23 funds including both equity and fixed income strategies that collectively house $48 billion in assets.

Within that offering is also the Dimensional Emerging Core Equity Market ETF (DFAE US) which houses $850 million and comes with an expense ratio of 0.35%. This fund is similar to the Dimensional Emerging Markets Core Equity 2 ETF in that both target initial broad market emerging market equity universes; however, the newly launched fund offers more focused exposure to the underlying factors.

Gerard O’Reilly, co-CEO and CIO of Dimensional Fund Advisors, said: “Dimensional’s expanded ETF suite leverages the firm’s 40-year track record of thoughtful portfolio design and flexible, cost-efficient implementation. Investors can benefit from these funds’ broadly diversified exposure to emerging markets, delivered with a robust, systematic, and scalable pursuit of higher expected returns.”

Dave Butler, co-CEO of Dimensional Fund Advisors, added: “Our expanding ETF suite provides financial professionals with a full set of solutions to build globally diversified asset allocation models using Dimensional ETFs. We’re pleased with the strong demand we are seeing for our ETF suite and look forward to serving our clients with even broader exposure to Dimensional portfolios across geographies, asset classes, and solution types.”

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