Retail Alternative to DFEVX DFA EM Value

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caklim00
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Retail Alternative to DFEVX DFA EM Value

Post by caklim00 »

I've been using DFEVX for my EM allocation as I have access to it a an old employer through their 401k. Combining the poor performance of EM Value and additional money elsewhere I am now officially underweight EM per my IPS.

I'm trying to find a good candidate for EM Value in taxable. Putting funds inside M*Xray I see the following
DFEVX: P/B 0.70 Mkt Cap: 9,484.80 ER 0.56
AVEM: P/B 1.19 Mkt Cap: 16,115.47 ER 0.33
EMGF: P/B 1.29 Mkt Cap: 16,209.11 ER 0.45
FNDE: P/B 0.87 Mkt Cap: 31,104.94 ER 0.39
TLTE: P/B 0.89 Mkt Cap: 10,569.11 ER 0.59
VWO: P/B 1.53 Mkt Cap: 29,667.64 ER 0.10

I looked up TLTE on the Flexshares website and wasn't impressed though it looks to be the most similar DFEVX. Initial inclination is to go with AVEM and use either EMGF, FNDE, or plain old VWO as a tax loss harvest partner. Anyone have any other thoughts or something I missed during my analysis? Note: I previously held DGS but do not want to go down that path in taxable.
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Robert T
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Re: Retail Alternative to DFEVX DFA EM Value

Post by Robert T »

.
caklim00 wrote: Thu Aug 27, 2020 2:32 pm I've been using DFEVX for my EM allocation as I have access to it a an old employer through their 401k. Combining the poor performance of EM Value and additional money elsewhere I am now officially underweight EM per my IPS.

I'm trying to find a good candidate for EM Value in taxable. Putting funds inside M*Xray I see the following
DFEVX: P/B 0.70 Mkt Cap: 9,484.80 ER 0.56
AVEM: P/B 1.19 Mkt Cap: 16,115.47 ER 0.33
EMGF: P/B 1.29 Mkt Cap: 16,209.11 ER 0.45
FNDE: P/B 0.87 Mkt Cap: 31,104.94 ER 0.39
TLTE: P/B 0.89 Mkt Cap: 10,569.11 ER 0.59
VWO: P/B 1.53 Mkt Cap: 29,667.64 ER 0.10

I looked up TLTE on the Flexshares website and wasn't impressed though it looks to be the most similar DFEVX. Initial inclination is to go with AVEM and use either EMGF, FNDE, or plain old VWO as a tax loss harvest partner. Anyone have any other thoughts or something I missed during my analysis? Note: I previously held DGS but do not want to go down that path in taxable.
Always good to see what Altruist has on the roster https://www.altruistfa.com/emergingvalue%20funds.htm

Another metric to consider in EM markets is portfolio turnover. Arguably bid-ask spreads are wider for EM stocks which increases costs for higher turnover strategies. As soon as momentum is added as a factor in stock selection turnover goes up and fund capacity goes down. I did closely consider MFEM (PIMCO RAFI EM Multi-factor ETF) – the factor loads looked okay but had concerns about turnover and capacity. Maybe overly cautious as DGS (Wisdomtree EM Small Cap Dividend) has still managed to perform well with high turnover.

Another thing you may want to consider is country coverage. Some EM funds exclude South Korea as its included in their Developed Markets Indices/Funds – that includes FNDE, PXH, and VWO.

As you use the Avantis Small Cap International fund (that excludes S. Korea), you may want to choose an EM fund that includes it such as the Avantis EM fund for consistency. Then you could use the DFA EM Core ETF for tax loss harvesting when it becomes available. A concern I have with Avantis in taxable is longevity risk of Avantis funds e.g. what would happen to Avantis is something (God forbid) happened to Eduardo Repetto?

Turnover
UEVM: 67%
EMGF: 53%
TLTE: 45%
MFEM: 43%
FNDE: 32%
PXH: 29%
DFEVX: 21%
EEM: 15%
VWO: 9%
DFCEX: 4%*

*The Avantis EM fund seems fairly close to the DFA EM Core Fund (DFECX) so expect it will have fairly low turnover.
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Nahtanoj
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Re: Retail Alternative to DFEVX DFA EM Value

Post by Nahtanoj »

Earlier this month, Dodge & Cox filed with the SEC for a new retail emerging markets stock fund, with a proposed effective date of November 6. Based on what you see in the other D&C equity funds, this is likely to be an emerging market value portfolio with low turnover. The annual expense ratio (after fee waivers) is estimated at 0.70%.
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caklim00
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Re: Retail Alternative to DFEVX DFA EM Value

Post by caklim00 »

Robert T wrote: Thu Aug 27, 2020 7:57 pm .
caklim00 wrote: Thu Aug 27, 2020 2:32 pm I've been using DFEVX for my EM allocation as I have access to it a an old employer through their 401k. Combining the poor performance of EM Value and additional money elsewhere I am now officially underweight EM per my IPS.

I'm trying to find a good candidate for EM Value in taxable. Putting funds inside M*Xray I see the following
DFEVX: P/B 0.70 Mkt Cap: 9,484.80 ER 0.56
AVEM: P/B 1.19 Mkt Cap: 16,115.47 ER 0.33
EMGF: P/B 1.29 Mkt Cap: 16,209.11 ER 0.45
FNDE: P/B 0.87 Mkt Cap: 31,104.94 ER 0.39
TLTE: P/B 0.89 Mkt Cap: 10,569.11 ER 0.59
VWO: P/B 1.53 Mkt Cap: 29,667.64 ER 0.10

I looked up TLTE on the Flexshares website and wasn't impressed though it looks to be the most similar DFEVX. Initial inclination is to go with AVEM and use either EMGF, FNDE, or plain old VWO as a tax loss harvest partner. Anyone have any other thoughts or something I missed during my analysis? Note: I previously held DGS but do not want to go down that path in taxable.
Always good to see what Altruist has on the roster https://www.altruistfa.com/emergingvalue%20funds.htm

Another metric to consider in EM markets is portfolio turnover. Arguably bid-ask spreads are wider for EM stocks which increases costs for higher turnover strategies. As soon as momentum is added as a factor in stock selection turnover goes up and fund capacity goes down. I did closely consider MFEM (PIMCO RAFI EM Multi-factor ETF) – the factor loads looked okay but had concerns about turnover and capacity. Maybe overly cautious as DGS (Wisdomtree EM Small Cap Dividend) has still managed to perform well with high turnover.

Another thing you may want to consider is country coverage. Some EM funds exclude South Korea as its included in their Developed Markets Indices/Funds – that includes FNDE, PXH, and VWO.

As you use the Avantis Small Cap International fund (that excludes S. Korea), you may want to choose an EM fund that includes it such as the Avantis EM fund for consistency. Then you could use the DFA EM Core ETF for tax loss harvesting when it becomes available. A concern I have with Avantis in taxable is longevity risk of Avantis funds e.g. what would happen to Avantis is something (God forbid) happened to Eduardo Repetto?

Turnover
UEVM: 67%
EMGF: 53%
TLTE: 45%
MFEM: 43%
FNDE: 32%
PXH: 29%
DFEVX: 21%
EEM: 15%
VWO: 9%
DFCEX: 4%*

*The Avantis EM fund seems fairly close to the DFA EM Core Fund (DFECX) so expect it will have fairly low turnover.
.
Thank you. Hopefully, the DFA EM Core ETF is released soon. I had completely forgotten that DFA is going to release ETF versions of their Core funds. Hopefully they will reduce their ER (DFECX is currently .48%) Agree about that risk with Avantis in taxable. I decided to jump in since they were gaining assets fairly quickly especially in a very tough environment. I have to imagine long term they would either stick around with others at the helm or get acquired by someone else. Risk there would be that someone would change the philosophy of their investment process.
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Robert T
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Re: Retail Alternative to DFEVX DFA EM Value

Post by Robert T »

caklim00 wrote: Fri Aug 28, 2020 7:12 amAgree about that risk with Avantis in taxable. I decided to jump in since they were gaining assets fairly quickly especially in a very tough environment. I have to imagine long term they would either stick around with others at the helm or get acquired by someone else. Risk there would be that someone would change the philosophy of their investment process.
Hope they deepen the bench in the interim. If it came to acquisition, I am sure DFA would be very happy to acquire them (same investment philosophy) so perhaps risks are low.
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LaughingStoic
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Re: Retail Alternative to DFEVX DFA EM Value

Post by LaughingStoic »

Dodge & Cox anticipate launching their EM Fund in May of this year. https://dodgeandcox.com/EMSF.asp
tryingmybest
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Re: Retail Alternative to DFEVX DFA EM Value

Post by tryingmybest »

The ER of DFEVX has will be/was lowered in 2020 and 2021. From February 2021 it will be 0.41%.
Dimensional will reduce management fees across 33 equity mutual funds, representing a 15% reduction on an asset-weighted basis1 for the impacted funds. For a full list of the changes, please refer to the table below. The fee reduction will go into effect February 28, 2021.
https://us.dimensional.com/about-us/med ... t-11-02-20
Topic Author
caklim00
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Re: Retail Alternative to DFEVX DFA EM Value

Post by caklim00 »

tryingmybest wrote: Wed Jan 13, 2021 8:22 pm The ER of DFEVX has will be/was lowered in 2020 and 2021. From February 2021 it will be 0.41%.
Dimensional will reduce management fees across 33 equity mutual funds, representing a 15% reduction on an asset-weighted basis1 for the impacted funds. For a full list of the changes, please refer to the table below. The fee reduction will go into effect February 28, 2021.
https://us.dimensional.com/about-us/med ... t-11-02-20
great news. guessing its due to their loss of assets
JamesDean44
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Re: Retail Alternative to DFEVX DFA EM Value

Post by JamesDean44 »

caklim00 wrote: Thu Jan 14, 2021 10:12 pm
tryingmybest wrote: Wed Jan 13, 2021 8:22 pm The ER of DFEVX has will be/was lowered in 2020 and 2021. From February 2021 it will be 0.41%.
Dimensional will reduce management fees across 33 equity mutual funds, representing a 15% reduction on an asset-weighted basis1 for the impacted funds. For a full list of the changes, please refer to the table below. The fee reduction will go into effect February 28, 2021.
https://us.dimensional.com/about-us/med ... t-11-02-20
great news. guessing its due to their loss of assets
I am guessing you're right. Nice to see competition reducing costs.
LaughingStoic
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Re: Retail Alternative to DFEVX DFA EM Value

Post by LaughingStoic »

LaughingStoic wrote: Wed Jan 13, 2021 7:56 pm Dodge & Cox anticipate launching their EM Fund in May of this year. https://dodgeandcox.com/EMSF.asp
The fund is now open: https://www.dodgeandcox.com/EMSF.asp
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caklim00
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Re: Retail Alternative to DFEVX DFA EM Value

Post by caklim00 »

LaughingStoic wrote: Sat May 15, 2021 6:25 pm
LaughingStoic wrote: Wed Jan 13, 2021 7:56 pm Dodge & Cox anticipate launching their EM Fund in May of this year. https://dodgeandcox.com/EMSF.asp
The fund is now open: https://www.dodgeandcox.com/EMSF.asp
What's the ER? Not much info on this fund. Difficult for me to use as well I'm guessing since its not an ETF.
JamesDean44
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Re: Retail Alternative to DFEVX DFA EM Value

Post by JamesDean44 »

caklim00 wrote: Sun May 16, 2021 7:04 am
LaughingStoic wrote: Sat May 15, 2021 6:25 pm
LaughingStoic wrote: Wed Jan 13, 2021 7:56 pm Dodge & Cox anticipate launching their EM Fund in May of this year. https://dodgeandcox.com/EMSF.asp
The fund is now open: https://www.dodgeandcox.com/EMSF.asp
What's the ER? Not much info on this fund. Difficult for me to use as well I'm guessing since its not an ETF.
0.70% after fee waiver. If they get rid of the fee waiver, the ER will be substantially higher. It's a new fund, which is why there is limited info. The fund seema like it'll apply the firm's usual process with an opportunity set that is focused on emerging and frontier markets.
Topic Author
caklim00
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Joined: Mon May 26, 2008 10:09 am

Re: Retail Alternative to DFEVX DFA EM Value

Post by caklim00 »

JamesDean44 wrote: Sun May 16, 2021 8:17 am
caklim00 wrote: Sun May 16, 2021 7:04 am
LaughingStoic wrote: Sat May 15, 2021 6:25 pm
LaughingStoic wrote: Wed Jan 13, 2021 7:56 pm Dodge & Cox anticipate launching their EM Fund in May of this year. https://dodgeandcox.com/EMSF.asp
The fund is now open: https://www.dodgeandcox.com/EMSF.asp
What's the ER? Not much info on this fund. Difficult for me to use as well I'm guessing since its not an ETF.
0.70% after fee waiver. If they get rid of the fee waiver, the ER will be substantially higher. It's a new fund, which is why there is limited info. The fund seema like it'll apply the firm's usual process with an opportunity set that is focused on emerging and frontier markets.
Thanks, but yeah this is way to expensive given other options that exist.
Random Walker
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Re: Retail Alternative to DFEVX DFA EM Value

Post by Random Walker »

Robert T wrote: Thu Aug 27, 2020 7:57 pmAs soon as momentum is added as a factor in stock selection turnover goes up and fund capacity goes down.
.
Don’t momentum screens reduce turnover by not purchasing stocks with negative momentum and holding stocks with positive momentum? I guess these funds are just eliminating negative momentum. You’re referring to adding positive exposure to the momentum factor? Thanks,

Dave
JamesDean44
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Re: Retail Alternative to DFEVX DFA EM Value

Post by JamesDean44 »

caklim00 wrote: Sun May 16, 2021 9:04 pm
JamesDean44 wrote: Sun May 16, 2021 8:17 am
caklim00 wrote: Sun May 16, 2021 7:04 am
LaughingStoic wrote: Sat May 15, 2021 6:25 pm
LaughingStoic wrote: Wed Jan 13, 2021 7:56 pm Dodge & Cox anticipate launching their EM Fund in May of this year. https://dodgeandcox.com/EMSF.asp
The fund is now open: https://www.dodgeandcox.com/EMSF.asp
What's the ER? Not much info on this fund. Difficult for me to use as well I'm guessing since its not an ETF.
0.70% after fee waiver. If they get rid of the fee waiver, the ER will be substantially higher. It's a new fund, which is why there is limited info. The fund seema like it'll apply the firm's usual process with an opportunity set that is focused on emerging and frontier markets.
Thanks, but yeah this is way to expensive given other options that exist.
For sure. I'm not advocating for the fund and won't be investing myself. But if someone were looking for an actively-managed EM fund for whatever reason, this one would definitely be worth considering.
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