DFSV ETF

DFSV offers exposure to small-cap value stocks with a focus on long-term returns and broad diversification. Since its inception, DFSV has been outperforming the Russell 2000 Value Index and Russell 3000. Current market conditions and the market's high valuation pose risks, making this ETF a good defensive vehicle.

The Dimensional US Small Cap Value ETF is an actively managed small-cap value fund that has consistently outperformed its benchmark, the Russell 2000 Value Index, over the long term. Despite having AUM below $3 billion, the fund has shown strong performance on rolling five-year returns since August 2000, outperforming 71% of the time. This success rate increases as the holding period lengthens, indicating that the fund's proprietary value strategy, which includes selecting nearly 1,000 stocks with market caps as low as $14 million, is effective. However, it is worth noting that other actively managed funds are also performing well in this space.

Dimensional US Small Cap Value ETF is an actively managed fund holding over 1000 small caps. The DFSV ETF selects stocks based on valuation and profitability. It is well-diversified across holdings, but quite heavy in the financial sector. DFSV has outperformed the Russell 2000 benchmark and passively managed small-cap value ETFs since its inception, but faces competition from Avantis U.S. Small Cap Value ETF.

The latest ETF 360 features Dimensional's Rob Harvey in conversation with VettaFi's Head of Research Todd Rosenbluth. The two discussed Dimensional's broad success and the Dimensional US Small Cap Value ETF (DFSV).

DFSV is a mostly solid small-cap echelon-focused actively managed ETF. As it frequently happens with funds looking promising on the surface, there are a lot of nuances beneath it. My analysis showed that mid-caps, not their smaller counterparts, have an outsized impact on the fund's performance due to the weighting schema. While attractively valued, DFSV's portfolio is burdened by a meaningful share of low-quality stocks, a mix that I believe is worth avoiding in the current macro situation.