DFA Emerging Markets Small Cap I (DEMSX)
Expense Ratio: 0.79%
Expected Lifetime Fees: $24,043.94
The DFA Emerging Markets Small Cap I fund (DEMSX) is a Diversified Emerging Mkts fund started on 03/5/1998 and has $2.30 billion in assets under management. The current manager has been running DFA Emerging Markets Small Cap I since 03/23/2012. The fund is rated by Morningstar. This fund does not charge 12b-1 fees.
Vanguard Emerging Markets Stock ETF (VWO)
Expense Ratio: 0.20%
Expected Lifetime Fees: $6,475.12
The Vanguard Emerging Markets Stock ETF (VWO) is an Exchange Traded Fund. It is a "basket" of securities that index the Diversified Emerging Mkts investment strategy and is an alternative to a Diversified Emerging Mkts mutual fund. Fees are very low compared to a comparable mutual fund like DFA Emerging Markets Small Cap I because computers automatically manage the stocks.
|Mutual Fund Name||Ticker Symbol||Turnover||Assets (M)||Annual Fees|
|American Funds New World F-2||NFFFX||25.0%||17,500||0.76%|
|American Funds New World R5||RNWFX||25.0%||17,500||0.71%|
|American Funds New World R6||RNWGX||25.0%||17,500||0.66%|
|DFA Emerging Markets Core Equity I||DFCEX||1.0%||7,100||0.67%|
|DFA Emerging Markets I||DFEMX||16.0%||2,400||0.61%|
|DFA Emerging Markets Social Core Equity||DFESX||28.0%||328||0.70%|
|DFA Emerging Markets Value I||DFEVX||5.0%||14,200||0.61%|
|Northern Emerging Markets Equity Index||NOEMX||33.2%||1,500||0.30%|
|Schwab Fundamental Emerg Mkts Idx||SFENX||56.0%||293||0.60%|
|Vanguard Emerging Mkts Stock Idx||VEIEX||10.0%||59,800||0.33%|
|Vanguard Emerging Mkts Stock Idx Inst||VEMIX||10.0%||59,800||0.13%|
|Vanguard Emerging Mkts Stock Idx Signal||VERSX||10.0%||59,800||0.20%|
Turnover represents how much of a mutual fund's holdings are changed over the course of a year through buying and selling. Active mutual funds have an average turnover rate of about 85%, meaning that funds are turning over nearly all of their holdings every year. A high turnover means you could make lower returns because: 1) buying and selling stocks costs money through commissions and spreads and 2) the fund will distribute yearly capital gains which increases your taxes. Look for funds with turnover rates below 50%. For comparison, ETF turnover rates average around 10% or lower.
Generally, smaller funds do better than larger ones. The more assets in a mutual fund, the lower the chance that it will beat its index. Managers outperform an index by choosing stocks that are undervalued. In order to find these undervalued stocks, the manager has to know more than his competitors to develop an "edge." There are only a finite number of stocks a mutual fund manager can reasonably analyze and actively track to gain such a competitive edge. When the fund has more assets, the manager must analyze large companies because he needs to take larger positions. Large companies are more efficiently priced in the market and it becomes increasingly difficult to get an edge.