Dimensional US High Profitability ETF

DUHP

Market cap $9.66B

DUHP is designed to provide consistent exposure to highly profitable U.S. large- and mid-cap stocks. Its expense ratio is 0.21% and the ETF has $9.05 billion in assets under management. My fundamental analysis verified Dimensional's claims of high-quality and broad diversification at the sector level. As such, it's a potential long-term core holding, but there are alternatives. This article compares DUHP against JQUA, SPHQ, and GARP, all of which have outperformed since its launch in February 2022. Arguably, they're better complements to broad market funds like SPY.

Uncertainty remains high and concerns about economic strength remain very real. But calls for a look at quality growth are getting louder as we approach the second half of the year.

Dimensional US High Profitability ETF has a portfolio of 167 stocks focused on large companies with quality characteristics. The DUHP ETF has outperformed the Russell 1000 benchmark since its inception three years ago, with lower risk metrics. Nonetheless, at least one competitor in the quality ETF category is slightly better than DUHP based on performance, risk, and fees.

One of the investment themes gaining momentum for 2025 is the return of value investing as a path to much-needed diversification and potentially outsized returns. A focus on quality within value is equally ringing loud.

Quality approach investments remain appropriate in the current environment, historically delivering returns in line with the broader market but with lower volatility. Dimensional US High Profitability ETF offers a diversified allocation, including technology, industrials, healthcare, and consumer staples. DUHP's stock selection provided a gain in terms of profitability, while valuation remains near the level of the broader index and other quality ETFs.

DUHP is an actively-managed large-cap blend ETF emphasizing high-quality stocks, as measured by earnings relative to book value or assets. Expenses are 0.22% and DUHP has $5.66 billion in assets. DUHP is also broadly-diversified, with exposure to 85/160 GICS sub-industries. Total Magnificent Seven exposure is only 14.54%, as DUHP excludes Alphabet, Amazon, Meta Platforms, and Tesla. DUHP serves as an excellent complement to JQUA. With only 38% overlap, an equal-weight portfolio of these two ETFs is better-diversified than SPY while offering investors a slightly lower P/E.

In pursuit of capital appreciation, actively managed DUHP favors large-size, solidly profitable U.S. companies. Since my April 2023 note, DUHP has delivered an impressive return, which I believe was predominantly driven by the IT sector and the growth factor. DUHP has a lot to offer regarding profitability but not much growth, and its performance is lagging a bit compared to JQUA and QUAL.