DFA US Large Cap Value Portfolio has a deeper value orientation than the Russell 1000 Value Index and tends to be riskier. But it should reward investors that can weather its volatility.

The fund achieves its strong value orientation in a cost-conscious manner that diversifies stock-specific risks. The managers start with stocks in the top 90% of the U.S. market by market capitalization. They sort these firms based on their price/book ratio and go after those landing in the bottom 30% by that metric. This strategy is more focused on the cheapest segment of the market than many of its competitors, giving it one of the most pronounced value tilts in the large-value Morningstar Category. Dimensional launched the exchange-traded fund version of this strategy in late 2022, and it follows the same underlying process.

Within this subset, the managers further emphasize stocks with lower valuations, smaller market caps, and higher profitability. They tilt the portfolio toward these factors by scaling each stock's market cap with a market-cap multiplier. Those with smaller market caps, lower valuations, and higher profitability receive larger multipliers than stocks with opposite characteristics. Each of these factors has historically been associated with market-beating performance, so this weighting approach could modestly improve the fund's long-term performance. It also mitigates turnover as each stock's weight changes in proportion to its market cap.

The portfolio looks modestly different from the Russell 1000 Value Index. DFA's portfolio managers exclude regulated utilities because these stocks typically trade at lower valuations but have limited growth potential. The fund also excludes REITs because Dimensional treats them as a separate asset class. The portfolio makes up for these differences by overweighting stocks in the communications and healthcare sectors.

The fund's strong value orientation is reflected in its track record. Its standard deviation was 13% higher than the Russell 1000 Value over the 10 years through October 2023, but it beat the index by 39 basis points annualized over this stretch. Its acute focus on cheap stocks tends to fuel strong index-relative performance when the value factor is in favor. Its relatively low 0.22% expense ratio should be another long-term advantage.

Analyst Rating

A potent large-value portfolio.

Senior Analyst

Daniel Sotiroff

JPMorgan Chase & Co

Exxon Mobil

Chevron

Berkshire Hathaway Inc. - Ordinary Shares - Class B

ConocoPhillips

Comcast

Wells Fargo

Verizon

Cisco Systems

Elevance Health Inc

Cost-conscious execution underpins this portfolio of cheap stocks. It should reward long-term investors who are willing to weather its volatile tendencies and earns an Above Average Process Pillar rating.

Above Average

Process

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

Jed Fogdall is the longest-tenured manager on this fund. He started at Dimensional as a portfolio manager in 2004 and has helped manage this fund since February 2012. Fogdall also serves as head of portfolio management and chairs Dimensional's investment committee.

Dimensional took Joel Schneider off this fund in February 2022 and replaced him with Mary Phillips and John Hertzer. Managers may change from time to time to get experience with different portfolios, and Schneider remains at Dimensional as its deputy head of portfolio management for the Austin, Texas, office. Phillips also holds the role of deputy head of portfolio management for the firm's Charlotte, North Carolina, office. Hertzer is a relative newcomer and has helped manage portfolios since 2015.

This team executes strategies built 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 US Large Cap Value ETF

DFLV is actively managed to hold a broad and diversified selection of US large-cap companies of any sector that exhibit value characteristics. Portfolio holdings are weighted by market capitalization. 

SPDR S&P Regional Banking ETF

iShares BBB Rated Corporate Bond ETF

SPDR S&P Homebuilders ETF

SPDR S&P Retail ETF

Traders are betting big against some of the zones like retailers, regional banks, corporate bonds, homebuilders and biotech through ETFs.

5 Most Heavily Shorted ETFs So Far This Year

Dimensional Global Real Estate ETF

Dimensional Fund Advisors has announced the launch of two new exchange traded funds that offer targeted access to premiums across a diversified set of domestic large-cap value equities and a variety of U.S. and international real estate equities. Both strategies are systematic active transparent ETFs.

News for Dimensional US Large Cap Value ETF ETF (DFLV)