Meet DEXC ETF: Dimensional's New Emerging Market Ex. China ETF

How DEXC ETF Works

The Dimensional Emerging Markets ex China Core Equity ETF (DEXC) takes a hands-on approach to accessing emerging market opportunities while steering clear of China.

Managed by Dimensional Fund Advisors, this fund aims to capture the growth potential of diverse emerging economies by targeting long-term drivers of returns like smaller company sizes, lower relative prices, and higher profitability.

This means it tends to emphasize companies that might not be household names but show strong fundamentals and are undervalued relative to their peers.

This ETF dives into various emerging markets, including frontier markets, providing broad exposure to multiple sectors and countries. By actively adjusting its exposure, Dimensional seeks to keep costs low and adjust quickly to new opportunities, avoiding over-concentration in large, high-priced companies.

Plus, the fund uses strategies like foreign currency transactions and flexible trading to reduce expenses and manage risks effectively.

Unlike a traditional index fund, this ETF is actively managed, allowing for a more responsive strategy. Whether by lending out securities for extra income or strategically trading to keep up with market shifts, it’s a dynamic choice for investors who want to explore emerging markets without direct exposure to China.

The fund holds over 3,300 securities, with Taiwan Semiconductor Manufacturing (12.6%) and Samsung Electronics (3.75%) among the largest positions on inception date.

DEXC has a net expense ratio of 0.43% after an applied fee waiver of 0.10%.

Why Investors Should Consider DEXC ETF

Investors might consider the Dimensional Emerging Markets ex China Core Equity ETF (DEXC) for broad emerging markets exposure without China—a choice that could appeal to those wary of the accumulating risks in Chinese equities.

The escalating U.S.-China rivalry, potential tensions in the Taiwan Strait, and China’s slowing economic growth have added to market volatility over the past few years. Additionally, China’s unpredictable regulatory environment, including crackdowns on technology firms and data security issues, complicates the investment outlook. With Trump back as President and renewed tariff talks, China could face increased economic pressures, potentially dampening remaining investor interest.

By focusing on other emerging market countries with strong economic fundamentals, favorable demographics, and supportive government policies, investors can tap into the long-term growth potential of emerging markets while managing risk effectively.

The fund provides significant diversification with over 3,300 holdings, emphasizing smaller, undervalued companies with strong fundamentals (according to the manager) across diverse sectors and countries, including frontier markets.

Through active management, DEXC aims to control costs and adapt to market shifts, potentially suiting investors seeking a well-diversified emerging market portfolio with minimized reliance on China.

For more information about DEXC, visit the official fund page.

About Dimensional Fund Advisors

Since 1981, Dimensional has applied academic research to create practical investment strategies, focusing on a systematic approach that blends research-driven insights with portfolio design, management, and trading. With headquarters in Austin, Texas, and 14 offices worldwide, Dimensional works to help investors pursue returns while balancing factors that can impact outcomes. As of September 30, 2023, the firm manages $618 billion in assets across North America, Europe, Asia, and Australia.

Please note this article is for information purposes only and does not in any way constitute investment advice. It is essential that you seek advice from a registered financial professional prior to making any investment decision.