What Is DFEM? Dimensional Emerging Markets Core Equity 2 ETF
Last updated September 2026
Short answer
DFEM is Dimensional Emerging Markets Core Equity 2 ETF, an ETF that tracks Actively managed, no tracked index at a 0.39% expense ratio. DFEM is Dimensional's broad emerging markets equity fund, and the word core in its name understates how concentrated the top is. Taiwan Semiconductor at 9.8 percent, SK Hynix at 5.9 percent and Samsung Electronics at 5.0 percent together account for 20.7 percent of assets, all three in semiconductor manufacturing. Technology is 40 percent of the fund overall. Beneath that sits a long tail of much smaller companies, which is where Dimensional's systematic tilts show up. The fee is 0.39 percent, assets are $9.3 billion and the fund launched in 2022.
DFEM is issued by Dimensional Fund Advisors and tracks Actively managed, no tracked index. It charges a 0.39% expense ratio, holds approximately $9.3B in assets under management, yields about 1.85%, and launched in 2022.
One industry, three companies, a fifth of the fund
Emerging markets funds are sold as exposure to developing economies and demographic growth. What DFEM actually leads with is chips. Taiwan Semiconductor manufactures most of the world's advanced logic. SK Hynix and Samsung Electronics are two of the three companies that matter in memory. Together they are 20.7 percent of the fund, and the concentration continues further down: Samsung Electro-Mechanics at 0.6 percent, Unimicron at 0.5 percent and MPI Corp at 0.5 percent are all suppliers into the same supply chain.
The practical consequence is that DFEM's short-term behaviour has more to do with semiconductor pricing and capital spending than with consumer growth in developing economies. Memory in particular is a commodity business with a pronounced boom and bust rhythm. This is not a flaw in the fund's construction. It is what market capitalisation in emerging markets currently looks like, and it is true of most broad emerging markets funds to a similar degree.
What Core Equity 2 signals about the rest of the portfolio
Dimensional builds portfolios systematically rather than replicating an index, adjusting weights toward smaller companies, cheaper valuations and higher profitability relative to a market-cap starting point. The 2 in the name indicates a deeper tilt than the firm's first core strategy, meaning more weight moved away from the largest companies and toward the smaller and cheaper end.
That explains the presence of names like Unimicron and MPI Corp in a fund of this size. A pure market-cap emerging markets index would hold them at fractional weights or not at all. It also means the fund holds a very large number of positions, and that its result over time depends on whether the small-company and valuation tilts pay off, not just on how the three large chipmakers perform. The 0.39 percent fee is the price of that process, above an index tracker and below a traditional active manager.
China is smaller here than most people expect
Among the disclosed top holdings, Chinese companies appear modestly: Tencent at 1.7 percent, China Construction Bank at 0.6 percent and Alibaba at 0.6 percent. That is a combined 2.9 percent against 20.7 percent in the three Taiwanese and Korean chipmakers. Investors who assume an emerging markets fund is primarily a China position will find the top of this portfolio does not support that assumption.
Part of this is the deliberate tilt away from the largest companies, which reduces the weight of the biggest Chinese platforms relative to a market-cap index. Part is that Taiwan and Korea have unusually concentrated stock markets dominated by a few enormous manufacturers. Either way, anyone using DFEM to express a view about China specifically is using an imprecise instrument. The 2022 inception also means the fund's own record is short, though the underlying process is long-established.
DFEM holdings: top 10
Approximate weights as of August 2026. Each ticker links to its individual stock guide in Walnut.
| Rank | Ticker | Company | % of DFEM | |
|---|---|---|---|---|
| 1 | Taiwan Semiconductor Manufacturing Co Ltd | 9.8% | ||
| 2 | SK Hynix Inc | 5.9% | ||
| 3 | Samsung Electronics Co Ltd | 5.0% | ||
| 4 | Tencent Holdings Ltd | 1.7% | ||
| 5 | China Construction Bank Corp Class H | 0.6% | ||
| 6 | Alibaba Group Holding Ltd Ordinary Shares | 0.6% | ||
| 7 | Samsung Electro-Mechanics Co Ltd | 0.6% | ||
| 8 | Unimicron Technology Corp | 0.5% | ||
| 9 | MPI Corp | 0.5% |
How do I invest in DFEM?
There are three common ways to get DFEM exposure. Buy shares (or fractional shares) of DFEM directly at any major broker that lists it. Hold it as a core position and layer more concentrated ideas on top. Or build it into a thematic portfolio in Walnut, so DFEM sits alongside other holdings that express the same thesis, with target weights you can rebalance toward. DFEM trades like a stock during market hours, so you buy it the same way you would any listed share.
New to buying funds? See how to buy an ETF, step by step.
Is DFEM a good buy?
Whether DFEM is a good buy depends less on any single call and more on your time horizon and what you already hold: it tracks Actively managed, no tracked index, so the real question is whether you want that exposure in your mix and at what weight. We walk through valuation, concentration, and what would have to be true for it to outperform from here in is DFEM a buy?
The bottom line on DFEM
DFEM gives you Actively managed, no tracked index exposure in one ticker at a 0.39% expense ratio. Most investors use it as a core holding and layer more concentrated thematic portfolios on top.
More on DFEM
Whether DFEM is worth buying today depends more on your time horizon and what you already hold than on any single call. We walk through valuation, concentration, and what would have to be true for it to outperform from here in is DFEM a buy?
DFEM yields 1.85% as of August 2026, paid by passing through the dividends of its underlying holdings. For the payout schedule, history, and how the distributions are taxed, see DFEM dividend: yield and schedule.
New to funds like DFEM? Start with what an ETF is, then how to buy an ETF, or browse the full guide to ETF investing.
Wondering how DFEM fits the portfolio you already own? Walnut is an AI investing app that connects your brokerage read-only and answers questions like that about your actual holdings: overlap, concentration, and how each position tracks the S&P 500. Compare the best AI portfolio analyzers or see the best AI investing apps in 2026.
Investing in DFEM with AI
Connect the broker you already use and ask Walnut's AI how DFEM fits what you actually hold: what it overlaps with, what it leaves you exposed to, and how it has tracked the S&P 500. Read-only by default, and you approve anything before it reaches your broker.
FAQ
Why is a fifth of an emerging markets fund in semiconductors?
+
Because Taiwan and Korea are large components of the emerging markets universe and their stock markets are dominated by a small number of very large chip manufacturers. Taiwan Semiconductor at 9.8 percent, SK Hynix at 5.9 percent and Samsung Electronics at 5.0 percent are simply the biggest companies available. Most broad emerging markets funds share this feature to a similar degree.
What does Core Equity 2 mean?
+
It is Dimensional's naming for a broad portfolio with systematic tilts toward smaller companies, lower valuations and higher profitability, where the 2 indicates a stronger tilt than the firm's original core strategy. In practice it means more weight is shifted away from the largest constituents than a market-cap index would allocate, producing a longer tail of smaller holdings.
Is DFEM an index fund?
+
No. Dimensional runs systematic strategies without tracking a published benchmark, which gives the manager flexibility over when and how to trade rather than being forced to transact on index reconstitution dates. The approach is rules-driven rather than discretionary stock picking, so it sits between indexing and conventional active management in both behaviour and cost.
How much China exposure does the fund carry?
+
Among disclosed top holdings, Chinese companies total around 2.9 percent through Tencent, China Construction Bank and Alibaba, well below the 20.7 percent held in Taiwanese and Korean chipmakers. The fund's full country breakdown will include a longer list of smaller Chinese positions, but the top of the portfolio is not China-led in the way many investors assume.
Does the memory cycle really affect the whole fund?
+
It affects a large part of it. SK Hynix and Samsung Electronics are memory manufacturers and Taiwan Semiconductor is exposed to the same capital spending cycle, so a meaningful share of the fund responds to chip pricing and inventory conditions. That does not determine the fund's entire outcome, since the remaining holdings are spread across many countries and sectors, but it is a substantial driver.
Why does the fund hold companies nobody has heard of?
+
The tilt toward smaller and cheaper companies deliberately allocates weight below the mega-caps, which is why positions like Unimicron in printed circuit substrates and MPI Corp in semiconductor test equipment appear. A market-cap index would give them negligible weight. Their presence is evidence the strategy is doing what it says rather than a sign of anything unusual.
Is 0.39 percent expensive for emerging markets?
+
It is higher than the cheapest emerging markets index trackers and lower than most traditional active funds in the category. Emerging markets are costlier to trade than developed ones because of local settlement, taxes and thinner liquidity, so fees across the whole category sit above US equity levels. The relevant comparison is against other emerging markets options, not against a US index fund.
When is DFEM the wrong tool?
+
When the goal is diversification away from technology, since the sector is 40 percent of the fund. When a specific country view is intended, because the systematic tilts make country weights an outcome rather than a choice. And for anyone expecting index-like tracking, since the fund does not follow a published benchmark and can diverge from one.
What is DFEM's expense ratio?
+
DFEM has an expense ratio of 0.39% per year as of August 2026, charged by Dimensional Fund Advisors and deducted from the fund's value rather than billed to you separately. On a $10,000 position that is roughly $39 a year. Fees compound over time, so on a long-term holding the expense ratio is one of the few return drivers you control. It is worth comparing against other funds that track Actively managed, no tracked index before you choose.
How do I compare DFEM to similar ETFs?
+
Put a few fields side by side: the expense ratio (fees compound over decades), the index or strategy it tracks, the top holdings and how much they overlap with what you already own, the dividend yield, and the AUM, liquidity, and bid-ask spread that affect trading costs. For index funds, tracking error (how closely it follows its index) and tax efficiency matter too. DFEM's figures are above; the full method is in Walnut's guide on how to compare ETFs.
Related ETFs
Walnut is informational, not investment advice. Holdings weights and fund statistics on this page are approximations stamped to August 2026; verify current figures against Dimensional Fund Advisors's fund page or your broker before investing.