Fund Rationale: Dimensional World Equity Fund

Dimensional World Equity Fund
SGD Institutional Class Accumulation Shares (ISIN: IE00BF20L762)
Fund Manager Page

Introductory information
The Dimensional World Equity Fund (the “Fund”) is a globally diversified portfolio of equities and has one of the broadest exposures to equity markets in the world with over ten thousand holdings. The fund is managed on a discretionary basis and primarily invests in shares of companies with exposure to developed and/or emerging markets. The Fund uses a core strategy that has general exposure to the overall stock market with a greater allocation to shares of smaller sized companies, value companies, and profitable companies. The Fund may invest up to 20% of its net assets in emerging market countries. The aim of the Fund is to increase the value of your investment over the long term through capital and market value appreciation. The Fund is suitable for investors seeking a long-term appreciation of capital and who are prepared to accept a high degree of volatility.

The Fund is a UCITS fund with net assets of SGD 2.7bn as of 30 April 2020. The inception date of the oldest share class of the Fund is 9 September 2011, while the SGD Institutional Class Accumulation Shares were incepted on 19 March 2018.

 

Characteristics
The Fund offers exposure to all sectors and across all countries providing a well-diversified equities market exposure consistent with Dimensional’s enduring belief in the power of markets. The Fund has 11,052 (as of 30 Apr 2020) holdings to express that broad exposure vs the benchmark, MSCI All Country World Index (“Index”) which has approximately 3044 (as of 30 Apr 2020) holdings. This also compares to the iShares MSCI ACWI UCITS ETF (SSAC:LN), a passive ETF that seeks to track the performance of the MSCI All Country World Index, which has a cost of 0.60% p.a. and only holds 1,559 (as of 30 Apr 2020) securities, less than the number of holdings in the Index itself.

The equivalent ETF listed in the US, the iShares MSCI ACWI ETF (ACWI:US), which has tax implications for non-US persons, has a cost of 0.33% p.a., and holds 2291 (as of 30 Apr 2020) securities. The value and small cap tilts are consistent with the factors that are sensible, persistent, and pervasive across markets and cost-effective to capture. As of 30 Apr 2020, the fund has a price to book of 1.51x vs the benchmark of 2.12x and a median market cap of US$1.15 billion vs the benchmark of US$3.99 billion.

 

Background information and cost
The fund has a unified all-in management fee of 40bps per annum (0.40% p.a.). As the fund scales, Dimensional and Endowus will continue to reduce the fees paid by the client for the underlying fund. Endowus do not charge an upfront sales charge or any other fees, other than the all-in Access Fee.  

Dimensional Investment Advisors are a global investment firm guided by deep convictions about the power of capital markets. They are a leader in applying advanced financial science to equity and fixed income investment strategies. By employing a rigorous and systematic investment approach, Dimensional seek to capture what the market offers in all its dimensions. For more than 30 years, Dimensional have translated research into real-world investment solutions for clients. Their clients include financial advisors, pension funds, retirement plans, college savings plans, insurance companies, endowments and foundations, and sovereign wealth funds. Dimensional manages USD 514bn firm-wide as of 30 June 2020.

 

Selection criteria for Endowus
Research by academics and practitioners show that tilts in equities towards value, size and profitability are pervasive factors that add statistically significant positive returns above the market. This is often known as smart beta or passive plus as it provides the overall broad market exposure capturing the total market returns but the tilts provide additional smart excess returns over the long-term. This smart excess return can be consistently captured by Dimensional’s disciplined and well-researched investment process, and their implementation expertise that has been refined over the years. While we have reviewed many funds that purport to have smart beta or active tilts or factor-based investing, our analysis shows that Dimensional consistently delivers better returns through the cycles and under all market conditions versus other peers or passive products such as ETFs. This is why the Fund is such an attractive proposition as it provides low volatility, market-based returns that are higher than passives or peers. The Fund is the best representation of Dimensional’s investment process as it captures the broadest exposure to global equities markets and has a consistent record of delivering strong risk-adjusted returns. It is also the most cost and tax efficient exposure to global markets.  It is the core equities asset class allocation for Endowus portfolios. This core allocation can be supplemented by other equities funds that provide an additional layer of tilts to the market exposure such as emerging market exposure or small-cap exposure that will generate lower correlation, lower volatility but higher quality risk-adjusted return to the diversified equities portfolio.

Updated by Endowus: 11 May 2020 

** Disclaimer
Past performance should not be taken as an indication or guarantee of future performance and no representation or warranty, express or implied, is made regarding future performance. Any opinions expressed reflect a judgment at the original date of publication by us and are subject to change without notice.

The prospectus, profile statement, product highlight sheet, fund factsheet or other offer or product documents may contain references about the expected risk tolerance of their target investors. These are in no way indicative of how we at Endowus have assessed your risk tolerance based on your stated objectives and financial situation. Endowus accepts no responsibility for investment decisions made in response to the expected risk tolerance levels mentioned in the product or offer documents.