Dimensional has launched some new UCITS ETF recently.
I find them very interesting for investors seeking to broadly pursue factor premiums in their portfolio.
Global Core Equity (DEGC) Acc (0.26 TER). Global ETF meant as a core allocation in place of a capm weighted world etf.
It holds about 4500 stocks, is generally focused on developed countries but may allocate up to 20% to emerging markets if they meet the factor criteria. Building on size, value und profitability in the core, and apparently also uses elaborated momentum tweaks to avoid buying into falling knives or sell winner too early.
Overall a very interesting product if you have a confiction to factor premiums.
It can also be built using DFAC (US market) and DPXM (ex us UCITS) to improve Swiss tax efficiency and decrease cost.
These look very interesting to me, especially given the global shenanigans going on with the stock market at the moment (crazy overvaluations for certain companies, dubious IPOs coming up). I haven’t bought yet though, need to do more research (and am a bit wary about the stock market in general given the global risks, I don’t think this stuff is enough to protect about a big global correction).
agree. I think the problem is atm that they are still very new and illiquid. I think waiting a bit longer to get them to a certain size (>500M or smth) is worthwhile.
Conflict + affliction = confliction? j/k I know you meant conviction, and f is very close to v, my fat fingers make similar mistakes.
It could be interesting, and it’s not too expensive for an actively-managed product but I’d like to seem them pick up AUM and depth of time before committing anything to them. What immediately feels expensive is my core holding, VWRL, priced at 22bp while WEBG is at 7bp…Maybe changing to DEGC would be more meaningful than changing to WEBG in terms of what I’m getting for what I’m paying.
Yeah I meant “conviction” . I researched quite a lot about factor strategies and the underlying academic foundation seems sound. It requires a quite some conviction due to the tracking error you might see with a core factor portfolio. Also factor investing had a difficult stretch the last 10-15 years and it has become rather quiet around it. Except for momentum which has done great in that period.
Compared to the factor methodology, mcw allocation seems rather arbitrary imo. WEBG is very tempting though to have very low cost beta exposure for the core holding.
A recent ben felix refresher video on factor investing (quite good as usual)
It seems, though like now might be great moment to buy into quality and value factors (e.g. through DEGC). JP morgan says in ther Q1 26 report, that they currently come at a almost 90 percentile historlical cheapness almost across all regions. Factor Views 1Q 2026 | J.P. Morgan Asset Management
I think if one goes with a factor ETF in the core, you have to go all in. Doing a 50/50 with a core factor and global MCW ETF would just delute the effect at higher TER. Not 100% sure about this though. So even more conviction needed
Fully agree with all points. My issue is that anyone half competent can write a robust and convincing paper about…anything, and factors sound logical but let’s not forget that they are glorified backtests. This is why I shy away from factors and “trust” MCW for my core holding. In fact “trust” is the wrong word, it’s admitting and embracing my own ignorance making MCW appear reasonable.
“I see many brown moths, so the brown colour must confer an evolutionary advantage” is true in biology, but like in investing it tells us nothing about the future.
Our CubanSwiss friend said UBS research only singled out momentum as a factor that worked over 100+ years (paraphrased, can’t remember the exact quote), I think.
Need to look at this fund carefully, including how they play with momentum and weighting, but yeah, I am interested, and 100% will need conviction to shift >50% of my assets to it. Let’s also not forget the size/depth of Vanguard, and massive VWRL AUM being a draw.
Are they though?
There are sound risk based explanations on why you should be compensated for value for example. You essentially buy a subset of riskier companies, and therefore should receive a premium for bearing that risk. And that has been the case and seems it continues to be the case.
A fund like AVDV (ex-US developed SCV) for example has curbstomped the general ex-US developed market since inception.
I think Dimension is trying to bring some logic to index investing by avoiding to do things that index funds are forced to do just because of their design.
In long term, if Dimensional is right or wrong, it will be known after decade or so. But atleast what they say makes sense. And this could be a new way of passive investing vs simply sticking to total market funds.
Having said that, making sense and outperforming the market is not the same thing over long term. For example not buying loss making companies also make sense but is it always a sure shot way to beat market ? Maybe not.
No, they try to make some money by offering a service that is different from what’s commonly on offer.
Dimensional will be right if they make more on their offering than they spent on making and maintaining it, it’s a business after all, not a charity.
I think what dimension makes as profit is immaterial to investors. What matters is what investors see as returns compared to vanilla index funds.
if investor returns are higher then it’s win win. Or else it’s just money moving from investor to Dimensional
In classical sense it’s not passive. But it’s kind of passive minus bad moves. So yeah could be called slightly active. For me active and passive is not that much of an issue. Fees & diversification are most important things
When it comes to factor investing, IMO the key is for the investor to have developed high enough conviction in the underlying theory and research (Fama&French et al). This conviction needs to be strong enough to bear through years of potential underperformance (factor premiums often come in cycles) and constant tracking error against major indexes at higher TERs. Most investors won’t and might not see their “win” as they abandon the strategy prematurely.
So if an investor has this conviction and the stamina, they need a way to actually implement the factor strategy in a cost and tax efficient. This is were Dimensional and Avantis come in, bringing their own proprietary algorithms for the implementation. The algorithms tell them what and how much and there seem to be some timing signals as well (e.g. DEGC seems to use positive and negative momentum as a signal to avoid buying into a falling knife or selling a selling a winner to early). Also there is some manager discretion about timing (e.g. not buying when all the index fonds do etc.). So in that sense the “active” mostly comes from the algorithm and not so much from a “active fond manager” making decisions.
I guess Index funds also follow a rules based algorithm but public rules and with no manager discretion at all making them truly passiv? I understand the actual definitions passive v.s. active are quite debated..
For an investor that doesn’t want to go all in. A viable strategy might be holding cheap market beta in the core (like webn) and then build a factor sleeve with little overlap to the core. For the factor sleeve, as @Tony1337 mentioned one can use (US Situs)
AVUV (US small cap)
AVDV (dev ex us small cap)
for EM: AVES (em small cap)
Or as IMO the best UCITS (global dev, ex-EM) AVGS (LSE). Currently no good EM UCITS ETF for this asik.
A meaningful allocation would be around 10-20% IMO to the factor sleeve.
This sleeve should work well along MCW core (like webn) but also if you decide for a slightly factor tilted core with DEGC.
Great point, sc growth is what you want to avoid as it has historically performed the worst. Thats why mcw sc etfs are generally a suboptimal investment and factor sc are likely a much smarter way to get exposure to that segment.
More recent research also put into question a pure small cap premium in general.
In small caps however you can get a lot higher factor loadings otherwise. That’s why the highest factor loading funds are small cap funds and why Dinensional funds tilt towards smaller caps as well.
Also what you really want to exclude is small cap growth low/no profitability. Those are the lottery type stocks and are systematically overpriced. People love to buy these lottery ticket like stocks, in the chance they get profitable and 100x. The vast majority of these stocks don’t though.
These are also the stocks the core funds of Dimensional fully exclude.
Another things with the small cap value funds is that they are generally multi factor (from Avantis and DFA). They not only target value, but also profitability in joint fashion and keep Momentum to 0 (pure value funds have negative momentum for example, as they buy recently fallen stocks when they become value stocks, still having negative momentum).
Basically all my equity holdings (besides Return Stacked funds) are in Dimensional Vector products DXUV/DXIV + AVEM. The Vector funds are basically the maximally tilted version of their core funds.
And I hold alt funds on top that employ long/short equity market neutral factor strategies. Basically giving pure factor exposure that way.
You sure have the most complex etf-based portfolio among us! This combined with that…
Have you ever compared how it behaves in comparison with, let’s say, sp500? Risk, return?
Sure it wouldn’t trigger the satisfaction of advanced portfolio strategy building and all the science I am sure you love to elaborate, hats off for that, but just curious about absolute perf.
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. I researched quite a lot about factor strategies and the underlying academic foundation seems sound. It requires a quite some conviction due to the tracking error you might see with a core factor portfolio. Also factor investing had a difficult stretch the last 10-15 years and it has become rather quiet around it. Except for momentum which has done great in that period.
