Some investors like to break down their portfolio into several different asset and sub-asset classes. One long-standing example of the “slice-and-dice” is the “” recommended by Paul Merriman (see pie chart; expanded labels below). You don’t need to hold every one of these asset classes, but when held in combination they historically offer a higher return with lower volatility.
- S&P 500 (US Large Cap Blend)
- US Large Value
- US Small
- US Small Value
- US REIT
- International Large Cap Blend
- International US Large Value
- International Small
- International Small Value
- Emerging Markets
- Short-term/Intermediate-term Bonds
For a long time, Dimensional Fund Advisors (DFA) offered some of the best lower-cost mutual funds tracking these types of sub-asset classes, but they also required you to invest through a DFA-affiliated financial advisor (and pay the accompanying management fees). Eventually, some former DFA executives and employees broke off and started , which are available to any investor with a brokerage accounts and offered a . Avantis’ assets under management have been growing…
Lo and behold, DFA has just announced a . Competition works!
Newly-listed DFA Bond ETFs
- Dimensional Core Fixed Income ETF (DFCF)
- Dimensional Short-Duration Fixed Income ETF (DFSD)
- Dimensional National Municipal Bond ETF (DFNM)
- Dimensional Inflation-Protected Securities ETF (DFIP)
Future DFA Equity ETFs
- International Core Equity 2 ETF
- Emerging Markets Core Equity 2 ETF
- US Small Cap Value ETF
- International Small Cap ETF
- International Small Cap Value ETF
- Emerging Markets Value ETF
- US High Profitability ETF
- International High Profitability ETF
- Emerging Markets High Profitability ETF
- US Real Estate ETF
Existing DFA ETFs
- Dimensional US Core Equity Market ETF (DFAU)
- Dimensional International Core Equity Market ETF (DFAI)
- Dimensional Emerging Core Equity Market ETF (DFAE)
- Dimensional US Core Equity 2 ETF (DFAC)
- Dimensional US Equity ETF (DFUS)
- Dimensional US Small Cap ETF (DFAS)
- Dimensional US Targeted Value ETF (DFAT)
- Dimensional International Value ETF (DFIV)
- Dimensional World ex US Core Equity 2 ETF (DFAX)
Some of the confusing names are a result of these ETFs being conversions from the old mutual fund versions. Even though I try to keep things relatively simple and humble, I welcome these new investment options to the competitive marketplace along with their reasonably-low expense ratios. I may even switch my TIPS holdings to the DFA TIPS ETF (DFIP), as it is cheaper than the iShares TIPS Bond ETF (TIP).
I use Vanguard for my “core” index funds, but about 10% of my is split between US Small Value and International/Emerging Small Value stocks. I recently bought/rebalanced into some of the new Avantis International Small Cap Value ETF (AVDV), but will keep an eye on the new DFA version. I suppose they could be a tax-loss harvesting ETF pair, but I have them inside a tax-sheltered account.
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