Dimensional World Equity ETF DFAW is a great, all-in-one global-stock fund. Its modest style tilts and low fee should provide a long-term edge over the MSCI ACWI.

The fund achieves its global stock exposure through a fund-of-funds structure. It holds five exchange-traded funds, four of which are Dimensional's core ETFs that include stocks of all sizes listed in the United States and foreign markets. Each of these strategies weights its holdings in a way that emphasizes stocks with smaller market caps, lower valuations, and higher profitability. The managers accomplish this by scaling the market cap of each stock in the portfolio. Those with smaller market caps, lower valuations, and higher profitability receive larger weights than those with opposite characteristics.
 
Tilting toward these factors should give this fund a modest long-term advantage over the MSCI ACWI. This weighting approach also keeps turnover low, since the weight of a given stock will change in proportion to its price. The fund rounds out its holdings with Dimensional Global Real Estate ETF, which weights its holdings by market capitalization.

Dimensional designed this strategy for U.S. investors, and its managers intentionally tilt the portfolio toward the U.S. market. On average, the fund allocates about 10% to 15% more to stocks listed in the U.S. than the MSCI ACWI. This cuts back on the amount of currency risk and should not have a big impact on long-term performance.

Dimensional launched this ETF in September 2023, so it has not accumulated a meaningful track record, but it has offered a nearly identical strategy, DFA Global Equity Portfolio, through a mutual fund since 2003. That portfolio outperformed the MSCI ACWI by 89 basis points annualized from its late 2003 inception through November 2023.

Analyst Rating

A comprehensive global-stock portfolio with some modest advantages.

Senior Analyst

Daniel Sotiroff

Dimensional US Core Equity 2 ETF

Dimensional International Core Equity 2 ETF

Dimensional ETF Trust - Dimensional US Core Equity 1 ETF

Dimensional Emerging Markets Core Equity 2 ETF

Dimensional Global Real Estate ETF

This strategy captures a wide swath of the global market. It emphasizes risk factors that have historically been associated with higher returns than the market. It earns an Above Average Process rating.

Above Average

Process

Dimensional's multimanager team structure and global network of trading desks support an Above Average People Pillar rating. The three named managers on this fund collaborate with the firm's trading desks to execute this strategy in the most cost-effective way possible. Spreading management responsibilities across several managers reduces the impact of personnel turnover when it does occur.

Jed Fogdall, the firm's global head of portfolio management, is the longest-tenured manager on this fund. He joined the lineup in 2012 and chairs Dimensional's investment committee.

Ashish Bhagwanjee, Allen Pu, Mary Phillips, and Joseph Hohn help oversee this fund. Bhagwanjee is a senior portfolio manager, while Pu and Phillips are deputy heads of portfolio management for Dimensional’s Santa Monica, California, and Charlotte, North Carolina, offices, respectively. Hohn has been a manager at Dimensional for over a decade and helps oversee the firm's ETF lineup.

This team executes strategies assembled by Dimensional's research department, which is helped by a number of prominent academics who serve as consultants. They vet the latest research and pursue only strategies that they find sensible, robust, persistent, and cost-effective

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 World Equity ETF

DFAW is an actively managed fund of funds that invests in a broad portfolio of stocks across all market capitalizations globally. The funds objective is to provide long-term capital appreciation.

Dimensional US Core Equity 1 ETF

Dimensional Ultrashort Fixed Income Etf

Dimensional Fund Advisors listed the Ultrashort Fixed Income ETF (NYSE Arca: DUSB) and World Equity ETF (NYSE Arca: DFAW). The actively managed ETFs begin trading on the New York Stock Exchange today.

News for Dimensional World Equity ETF ETF (DFAW)