Dimensional Global Core Equity Fund Review
I had recently written a review on Dimensional’s World Equity Fund. In that review, I mentioned that it was a good fund to choose when building up your portfolio.
However, Dimensional has another fund called the Global Core Equity Fund. Similarly, this fund is also available on Endowus’s Fund Smart product.
For most investors including myself, the difference between the 2 is not immediately obvious. We might be wondering which to choose to add to our portfolio.
In this article, I will be going through the fund, as well as its differences with the World Equity Fund. I hope that with these 2 articles, I can help you in making an informed decision.
The Dimensional Global Core Equity fund was incepted in 2017 and is SGD denominated. It, therefore, does not have a very long history for its performance.
The main purpose of this fund is to invest in Large-Cap companies in developed countries.
This fund does not track any specific index, but instead, benchmarks against the MSCI World Index.
It is very broadly diversified with a total holding of 7,823 stocks. Compared to the index’s 1,640, it can definitely provide you with the diversification that you need.
Domiciled In Ireland
The fund is domiciled in Ireland. This is good for Singapore investors as we will only incur 15% tax withholding for the underlying US dividends.
As an accumulation fund, dividends are not paid out to the investors. Instead, they are immediately reinvested into the underlying assets. For long term investors not looking for income but growth, this is the perfect setup!
This is in line with the other Dimensional Funds chosen by Endowus. It allows Singapore investors to maximise the profit by minimising the tax burdens.
The fund’s top 5 holdings are Apple, Microsoft, Amazon, Verizon and Facebook.
As we can see from the table above, the weightage on the top 3 holdings a relatively large. Combined, they are 7.34%. This would mean that the performance of this fund will be heavily impacted by the performance of those 3 stocks.
In addition, the top 10 holdings also weights about 11.90% of the entire fund. This will translate to higher volatility for fund as its performance is tied to a smaller number of stocks.
A large portion of the holdings is located in the Americas. The rest are scattered across Asia and Europe. This fund also invests almost entirely in developed countries. It has little to no exposure to emerging markets such as China and India.
This also means that it is a less geographically diversified fund.
In terms of sectors, the technology sector again takes the highest weightage. When compared to the World Equity Fund, they are really similar.
As this is a relatively new fund, its performance data is fairly limited. In the past 3 years, its annualised returns is 6.10%.
At the time of writing, the dividend yield of the fund is 2.71%. This is a pretty respectable amount of yield.
Of course, this is a very limited view and hardly indicative of future performance.
The fund comes in at a Total Expense Ratio (TER) of 0.30%. For every $10,000 invested, $3 is used to pay the fund managers and the fund’s expenses.
This is a comparatively low fee as compared to other mutual funds out there. It even outperforms the World Equity Fund which charges an expense ratio of 0.40%.
If you’re looking to minimise your cost, this is the fund to choose.
A likely explanation for the lower cost will be the smaller number of holdings this fund has. The operating cost of purchasing the underlying stocks will be much lower.
Comparison to the World Equity Fund
In this section, I will specifically compare the Global Equity Fund with the World Equity Fund.
Since they are so similar, why should somebody choose one over the other?
|Global Equity Fund||World Equity Fund|
|Fund Type||Mutual Fund||Mutual Fund|
|Total Expense Ratio (TER)||0.30%||0.40%|
|Number of holdings||7,823||11,052|
|Cap Focus||Large Cap||All Cap|
I believe the above table sums up nicely the differences between the 2 funds.
The Global Equity Fund is a fund that focuses on Large-Cap companies in developed countries where the World Equity Fund focuses on everything.
In my opinion, the World Equity Fund will have a slightly higher risk as compared to the Global Equity Fund. This is because it invests in emerging markets as well as Small-Cap companies which tend to be more volatile.
However, it is likely that the fund will be able to capture any upsides that those emerging markets might have. This is especially important for investors who believe in the rise of China and India markets.
You will not go wrong by choosing either of these funds.
This has been an interesting research exercise for me looking into the various Dimensional funds.
With the introduction of the Fund Smart feature by Endowus, investors now have a very convenient way of gaining access to these funds. Personally, I am using the Fund Smart to invest my SRS funds. There has never been an easier way for anyone to invest in a diversified global fund with their SRS / CPF funds.
Between the 2 funds, I will be choosing the Global Equity Fund over the World Equity Fund when making up my portfolio. This is because I am pairing it with the Emerging Markets Large Cap Core Equity Fund (what a mouthful).
I believe this can give me more control over the percentages of emerging market exposure I want in my portfolio. However, if you’re not that particular over the weights, then holding just the World Equity Fund would be a good choice.
I hope that this review of the Dimensional Global Core Equity can help you in building up your own investment portfolio!