Dimensional World Equity SGD Acc

Analyst Report
Morningstar's Take
|16/12/2020

by Dimitar Boyadzhiev


Dimensional World Equity follows a simple and repeatable approach that blankets nearly every investable company in the world, including emerging-markets companies. Resting on the research of renowned academics such as Eugene Fama and Kenneth French, the strategy gives overweightings to stocks with lower valuations (measured by price/book ratio), smaller market capitalisations, and higher profitability (using an adjusted measure of operating income).Research shows that stocks with these characteristics have tended to outperform over the long term. The managers exclude the most expensive and unprofitable companies completely and apply market-cap multipliers to give under- or overweightings to the remaining stocks, depending on how much they possess of the desired characteristics.The resulting portfolio is broad and well-diversified, with overweightings in large-, mid-, small-, and micro-cap stocks at the expense of giant caps and a marginally lower return on investment capital compared with the average peer in the global flex-cap equity Morningstar Category.The use of market-cap multipliers to weight holdings has limited fund turnover. It has also led to a modest bias toward emerging-markets stocks at the expense of European stocks. Performance has ranked in the top quartile of the category on a risk-adjusted basis during the trailing five- and ten-year periods, while it lagged over the past three.This fund is a representative and well-diversified strategy that consists of over 11,500 holdings with a tilt toward smaller, cheaper, and more-profitable companies. In addition, the weighting approach limits turnover, trades are executed efficiently, and fees (0.40%) are low relative to rival active peers. With these attributes, we can expect the fund to continue producing superior risk-adjusted returns relative to peers. We have therefore retained its Morningstar Analyst Rating of Silver.

Morningstar Analyst Rating™
To find out how Morningstar rates a fund click here.
Portfolio RoleGlobal equity exposure.
Morningstar Pillars
PeopleAbove Average
The fund is managed on a team basis.
ParentHigh
A disciplined approach to investment management.
ProcessAbove Average
The fund sacrifices deeper factor tilts for broader diversification.
Performance
The fund’s value tilt had a short-term negative impact, but the fund still outperformed most of its peers over the long term.
Morningstar Analyst RatingMorningstar evaluates funds based on five key pillars, which it's analysts believe lead to funds that are most likely to outperform over the long term on a risk-adjusted basis.
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In order to provide consistency across the report data provided by different Asset Managers, the calculated data points presented are generated using Morningstar’s proprietary calculation methodology which is set out in more detail at(https://www.morningstar.com/research/signature)

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