A sound investment process and strong management team underpin Dimensional International High Pbly ETF's Morningstar Medalist Rating of Silver. The portfolio maintains a sizable cost advantage over competitors, priced within the least expensive fee quintile among peers.  

 The strategy's sensible investment philosophy merits 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 an underweight in momentum exposure compared with category peers. High quality exposure is attributed to stocks with low financial leverage and strong returns on equity. And low momentum exposure is rooted in holding stocks that are not currently on a winning streak and instead holding those that managers believe are undervalued. The strategy’s management team earns an Above 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

Moelis

TotalEnergies SE

Rogers

National Energy Services Reunited

GlaxoSmithKline

AAR CORP.

DTE Energy

Canadian Natural Resources

Ashford Hospitality Trust

SPDR Bloomberg Barclays Mortgage Backed Bond ETF

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 International High Pbly ETF earns an Above Average Process Pillar rating. 

The main contributor to the rating is the parent firm's five-year risk-adjusted success ratio of 67%. 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. Strong risk-adjusted performance also bolsters the rating. This can be seen in the fund's five-year alpha calculated relative to the category index, which suggests that the managers have shown skill in their allocation of risk. 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 targets smaller plays than its peers’ average in the Foreign Large Blend Morningstar Category. But in terms of investment style, it is on par with peers. Examining additional factor exposure, this strategy has consistently favored high-quality stocks, including those with low financial leverage and solid returns on equity, compared with Morningstar Category peers during recent 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 has had lower exposure to momentum stocks over peers in recent years. Momentum investors tend to expect stocks that have done well recently to continue to do so in the short term. Momentum approaches can entail higher turnover and trading costs since the top stocks can often change. Similarly, in recent months, the strategy also had less exposure to the Momentum factor than peers. In addition, this strategy has exhibited a tilt toward higher-volatility stocks in these years, meaning companies that have a higher historical standard deviation of returns compared with peers. This contributes to a higher-risk, higher-reward approach. In this month, the strategy also had more exposure to the Volatility factor 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 energy and consumer cyclical relative to the category average by 5.2 and 4.9 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 13.1 percentage points of assets and real estate similar to the average. The portfolio is composed of 480 holdings and is relatively top-heavy. Of the strategy's assets, 24.5% are concentrated within the top 10 holdings, as opposed to the typical peer's 15.4%. And in closing, in terms of portfolio turnover, looking at year-over-year movements, 13% of the fund's holdings have turned over, whether through increasing, decreasing, or changing a position.

Above Average

Process

Dimensional International High Pbly ETF earns an Above Average People Pillar rating. The team is backed by Jed S. Fogdall, the longest-tenured manager on the strategy, who provides over 25 years of listed portfolio management experience. The average Morningstar Rating of the strategies they currently manage is 3.0 stars, indicating that their risk-adjusted returns have been in line with the category average. The team boasts an experienced corps of listed portfolio managers, with three others supporting Jed S. Fogdall. Together, they average 21 years of listed portfolio management experience. As a team, they manage four investment vehicles together, with a Silver asset-weighted average Morningstar Medalist Rating, indicating the potential to deliver positive alpha in aggregate. None of the managers here invest any money in the strategy, which is disappointing, as such investments help align managers' interests with fundholders.

 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.

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 International High Profitability ETF

DIHP invests in a broad and diverse group of non-US large-cap stocks from developed markets, actively selected based on perceived higher profitability relative to other large-cap companies in the same countries or region.

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Dimensional Fund Advisors has announced the launch of four new international ETFs. The new ETFs, which begin trading on the Chicago Board Options Exchange today, offer broadly diversified exposure to core international equities across market caps and styles as well as component solutions focused on international small-cap, international small-cap value, and international high profitability equities.

Dimensional Launches 4 New International ETFs

AUSTIN, Texas--(BUSINESS WIRE)--Dimensional Fund Advisors, a global leader in systematic multifactor investing, expanded its exchange-traded funds (ETFs) offering with today's listing of four new international ETFs on the Chicago Board Options Exchange (Cboe). The new ETFs offer broadly diversified exposure to core international equities across market caps and styles as well as component solutions focused on international small cap, international small cap value, and international high profitab

News for Dimensional International High Profitability ETF ETF (DIHP)