Dimensional Emerging Markets Value ETF

DFEV

Market cap $1.75B

DFA Dimensional Emerging Markets Value ETF offers diversified exposure to 3,000+ emerging market stocks, emphasizing value and profitability factors. DFEV has outperformed the EEM benchmark by 2.3% annualized since inception, with lower volatility. The ETF maintains a lower allocation to China (25%) versus key competitors and focuses on financials (26.4%) and technology (22%).

At the same time developed markets have been generating policy and macro noise, emerging markets have been quietly outperforming. The inextricable relationship between the direction of U.S. monetary policy and emerging market risk assets remains powerful, but this time the rally is not just about the Fed.

Emerging markets equity returns have been driven by extreme mega-cap concentration, with index breadth collapsing to historic lows and masking weakness across much of the opportunity set. This concentration has distorted relative results for active managers, particularly those constrained by diversification rules or broad benchmarks, as small-cap underperformance and index construction limit flexibility.

Emerging markets continued to expand at a solid pace midway into the first quarter of 2024, supported by broad-based expansion across both manufacturing and service sectors.

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.