Dimensional Em Mkts High Prof ETF’s management team is rated Average, but a solid investment process still helps this strategy retain its Morningstar Medalist Rating of Bronze. The portfolio maintains a sizable cost advantage over competitors, priced within the lowest fee quintile among peers.  

 The strategy's effective investment philosophy supports an Above Average Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained a significant overweight position in quality exposure and yield exposure compared with category peers. A high quality exposure means holding stocks that are consistently profitable, growing, and have solid balance sheets. And a high yield exposure is rooted in holding high dividend-paying or buyback stocks. The strategy’s management team earns an Average People Pillar rating. The strategy's parent organization earns the firm a High Parent Pillar rating. People Pillar and Parent Pillar ratings for this strategy are indirectly assigned by a Morningstar analyst rather than algorithmically derived. Please see the notes following each pillar section for more details. The details of assigning methods can be found in each pillar section.

Analyst Rating

JPMorgan BetaBuilders Canada ETF

Stewart Information Services

Vail Resorts

DNP Select Income Fund Inc

Molina Healthcare

IQ Real Return ETF

Cushing Energy Income Fund of Benef Interest

Celestica

Sotheby's

Aduro BioTech

Morningstar's evaluation of this security's process aims to determine the likelihood that it will outperform its Morningstar Category index on a risk-adjusted basis over the long term. Dimensional Em Mkts High Prof ETF earns an Above Average Process Pillar rating. 

The largest contributor to the rating is the parent firm's five-year risk-adjusted success ratio of 71%. The measure indicates the percentage of a firm's funds that survived and beat their respective category's median Morningstar Risk-Adjusted Return for the period. The firm's five-year retention rate of 85% also strengthens the process. Lastly, the process is limited by being an actively managed strategy. Historical data, like Morningstar's Active/Passive Barometer, finds that actively managed funds have generally underperformed their passive counterparts, especially over longer time horizons.

 This strategy skews toward smaller, deeper value companies than its average peer in the Diversified Emerging Mkts Morningstar Category. Examining additional factor exposure, this strategy has consistently had a defensive tilt owing to its exposure to high-quality stocks over the past few years. High exposure to the quality factor means holding companies that are consistently profitable, growing, and have solid balance sheets. In recent months, the strategy was more exposed to the Quality factor compared with its Morningstar Category peers as well. This strategy's portfolio also has had exposure to more stocks with high dividend or buyback yields over peers in these years. Stocks with high yields can be more stable, mature companies, but at times extreme market pressure or fundamental deterioration may prompt them to cut their dividends, which tends to hurt stock performance. Compared with category peers, however, the strategy had less Yield factor exposure in the latest month. In addition, this strategy holds highly liquid companies. This gives the managers more flexibility during bear markets to sell without adversely affecting prices. In recent months, however, the strategy had less Liquidity factor exposure over its peers. More information on a fund and its respective category's factor exposure can be found in the Factor Profile module within the Portfolio section. 

 The portfolio is overweight in communication services and technology relative to the category average by 5.6 and 5.0 percentage points, respectively. The sectors with low exposure compared to category peers are financial services and real estate, with financial services underweighting the average portfolio by 13.6 percentage points of assets and real estate similar to the average. The portfolio is composed of 570 holdings and is similarly diversified as peers, with 26.4% of portfolio assets concentrated within the top 10 holdings. And finally, in terms of portfolio turnover, on a year-over-year basis, 18% of the fund's holdings have turned over, whether through increasing, decreasing, or changing a position.

Above Average

Process

Dimensional Em Mkts High Prof ETF earns an Average People Pillar rating. The team is backed by Jed S. Fogdall, the longest-tenured manager on the strategy, who brings over 25 years of listed portfolio management experience. The average Morningstar Rating of the strategies they currently manage is 3.1 stars, reflecting average risk-adjusted performance versus category peers. Jed S. Fogdall is supported by an experienced team, being able to draw on three additional listed managers, who average 20 years of listed portfolio management experience. As a team, they manage two investment vehicles together, with an asset-weighted average Morningstar Medalist Rating of Neutral. This means, in aggregate, the team falls short and will struggle to produce positive alpha. None of the portfolio managers here invest in this fund. This hurts the rating because manager investment would align their interests with the strategy's investors.

 Note: The People Pillar rating is indirectly assigned by an analyst. The longest-tenured manager of the fund also manages a different product rated by an analyst. Their analyst-assigned People Pillar rating is combined here with the People scores (algorithmic or analyst-assigned) for the fund’s other managers on a tenure-weighted basis.

Average

People

Dimensional’s mutual fund business has faced some tough challenges over the past few years. Despite large and persistent outflows, the firm has remained steadfast in its philosophy and responded in a way that benefits clients while improving its competitiveness. Dimensional maintains its High Parent Pillar rating.

More than $80 billion left Dimensional’s mutual funds between 2020 and 2022, but its response to the turmoil has been admirable. The firm started reducing fees in early 2020, and it continued the effort with three additional rounds of cuts.

Dimensional’s endeavor into exchange-traded funds was the biggest step it took to shore up its business. The firm converted seven tax-managed mutual funds to ETFs between mid-2021 and mid-2022. Along the way, it launched an additional two dozen that largely follow the same strategies underpinning the existing mutual funds. The firm also reinvested in its separate accounts platform by bolstering the technology used to manage these portfolios. The effort was aimed at improving operational efficiencies.

These measures appear to be paying off. The firm’s new ETFs have proved popular among its clients. In 2022, they brought in enough new money to nearly offset the outflows from its mutual funds. The separate account platform’s operational improvements, along with the new ETF lineup’s tax efficiency, should benefit clients and strengthen the firm’s prospects.

High

Parent

Dimensional Etf Trust-Dimensional Emerging Markets High Profitability Etf

DEHP actively selects large-cap emerging markets companies exhibiting high profitability characteristics, seeking to provide long-term capital appreciation.

Avantis Emerging Markets Small Cap Equity ETF

Avantis Emerging Markets Value ETF

Dimensional Emerging Markets Value ETF

iShares MSCI Emerging Markets Small Cap ETF

iShares JP Morgan USD Emerging Markets Bond ETF

Overseas markets, particularly emerging markets, are expected to offer the best stock returns over the next decade. EM stocks trade at historically low valuations compared to the US and other international stocks.

The Case For Emerging Markets

Dimensional Emerging Markets Core Equity 2 ETF

Investors should consider the opportunities in developing economies and the advantages of systematic, active emerging market exchange traded fund strategies.

Active ETF Strategies to Better Navigate the Emerging Markets

Dimensional has applied a systematic yet flexible approach in its emerging markets strategies for nearly three decades. The firm recently expanded its offering to include exchange traded funds (ETFs), including emerging markets strategies.

How a Systematic Active Approach Can Pinpoint Opportunities in Emerging Markets

Dimensional Fund Advisors has expanded its suite of ETFs with the launch of three new ETFs which offer broadly diversified exposure to core, value, and high profitability equities within emerging markets. The new funds, listed on the NYSE on April 27, are the Emerging Markets Core Equity 2 ETF (DFEM), the Emerging Markets Value ETF (DFEV), and [.

Dimensional Launches 3 New Emerging Markets Equity ETFs

The issuer launched funds offering different angles on developing markets.

News for Dimensional Etf Trust-Dimensional Emerging Markets High Profitability Etf ETF (DEHP)