Understanding the Dimensional Emerging Markets Core Equity 2 ETF (DFEM)

The Dimensional Emerging Markets Core Equity 2 ETF (ticker: DFEM) is designed to provide exposure to companies located in emerging markets. This means the fund invests in businesses from developing economies around the world.

What this ETF is trying to do

DFEM seeks to capture the growth of emerging market economies by holding a variety of stocks. Based on its top holdings, the fund includes companies like ICICI Bank Ltd ADR, PDD Holdings Inc ADR, and HDFC Bank Ltd ADR. Because the holdings list provided is partial, these represent only some of the 27 total companies held by the fund. Please note that holdings can change over time.

What the numbers show

The data shows significant growth in both share price and total returns over different time periods.

• Year-to-Date (YTD): The price return is approximately 22.94%, while the total return is approximately 24.73%.

• One-Year: The price return was approximately 24.75%, and the total return was approximately 27.36%.

• Three-Year: The price return was approximately 75.38%, and the total return was approximately 87.87%.

It is important to understand the difference between these two numbers. The price return only measures how much the share price itself changed. The total return includes both the change in share price and the impact of any distributions (cash payments) made to investors.

For a visual example, the estimated price from roughly one year ago was $32.60. The current price is $40.67.

Income and distribution explanation

DFEM provides cash distributions to investors. The current distribution yield is approximately 1.91%. This yield describes the cash payments relative to the ETF's current price. The fund usually pays these distributions on a quarterly basis, with 4 payments recorded over the last 12 months.

NAV erosion explanation

"NAV erosion" refers to a decline in the Net Asset Value (the actual value of the fund's underlying assets). While a falling share price can sometimes be a sign of erosion, it is not the same thing.

The supplied data includes an erosion-risk score of 100, which is labeled as "No price erosion detected" with a "good" severity rating. There is no severe erosion-risk flag for this ETF. However, the supplied data is sufficient to evaluate price erosion, but it does not include enough historical NAV-per-share data to confirm or rule out NAV erosion.

Pros

• Strong Historical Returns: The fund has shown high positive price and total returns over the one-year and three-year periods.

• Low Price Erosion Risk: The current erosion-risk measurements are rated as "good."

Cons

• Market Risk: As an emerging markets fund, it is subject to the volatility of developing economies.

• Partial Data: The provided list of holdings is only a partial view of the full portfolio.

Beginner takeaway

DFEM has recently experienced significant growth in both its share price and its total return. While it offers a distribution yield of about 1.91%, investors should remember that total return is the most complete way to see how much value the fund has actually created, as it combines price changes with cash distributions.