This ETF holds a broad range of large- and mid-cap value stocks in developed markets outside the US. It is managed with a rules-based approach that gives more weight to profitable companies among undervalued stocks, and it diversifies across developed countries such as Japan and those in Europe.

It suits long-term investors who want to diversify across developed markets outside the US with a focus on the value factor.

It is an actively managed ETF run by Dimensional.

The fund uses a rules-based strategy that gives more weight to companies in developed markets outside the US that trade at low valuations and show solid profitability metrics. Instead of simply replicating an index, it selects stocks by reflecting value and profitability factors, and it also manages the portfolio with after-tax returns in mind.

• Rules-based selection combining value and profitability factors
• Management that takes tax efficiency into account

Assets under management (AUM) stand at $22.1B, and the total expense ratio is 0.27% per year.

Unlike developed-market ETFs weighted simply by market capitalization, it has a portfolio tilted toward the value factor, so its performance relative to the market can differ depending on the market environment.

The fund is affected by the overall trend in developed-market value stocks, exchange rates, and changes in relative valuations versus the US. Because the performance gap between value and growth stocks can widen depending on the market environment, its trend varies from period to period.

Fund flows shift with demand to diversify away from US concentration risk and with preferences for the value style. Periods of dollar strength or weakness affect the valuation of overseas assets, which can also make the direction of inflows and outflows volatile.

Its strengths are rules-based management that combines value and profitability factors and a low expense ratio, while its weakness is the performance swings that come with the value style depending on the market environment.

Products shown in the table such as DFEV and AVES target emerging-market value stocks and therefore have different regional exposure, while products such as AVIV and SFGV share the value factor but differ in issuer and fee structure. In addition, low-cost core ETFs that broadly cover developed markets outside the US include VEA and IEFA, and EFV, which directly targets the value style, is also worth considering as a substitute.

Here are the points to review before investing in DFIV. Because it is an international value-style ETF, it is wise to check its expense ratio, currency exposure, and the performance swings typical of the value style in advance, and to confirm that it fits the overseas allocation in your own portfolio.

Value style swings and exchange rate movements are the main drivers of short-term performance. When growth stocks are leading, the fund can lag the market average, and as an overseas asset it also carries currency risk.

It is a suitable choice for long-term investors who want to diversify across developed-market value stocks outside the US. If you prioritize cost and broad diversification, we recommend comparing core products such as VEA and IEFA, and if you prioritize value factor exposure, comparing value ETFs such as DFIV and EFV.