DFMC vs HSMV

DFMCAU.S. Micro Cap Portfolio ETF

HSMVCFirst Trust Horizon Managed Volatility Small/Mid ETF

In short

DFMC Dimensional's micro-cap workhorse: a systematic sweep of the smallest US listed companies, a strategy dating to 1981, now in an ETF wrapper. Not an index tracker, and it charges less than the typical active US equity fund.

HSMV Small and mid caps are where the swings live. HSMV screens them for low expected volatility, holding roughly 200 names picked by Horizon rather than an index. Small/mid exposure with the sharp edges sanded down.

Stated mandate

DFMC The Portfolio seeks long-term capital appreciation.

HSMV The Fund seeks capital appreciation by investing at least 80% of its net assets in U.S.-listed small- and/or mid-capitalization common stocks that Horizon believes have low future expected volatility.

Why people hold it

• DFMC Charges 0.43% a year, well under the median for active US equity funds, so the fee takes a smaller bite out of a hard-to-reach corner of the market.
• The strategy dates to 1981 and now runs as a multi-billion-dollar portfolio: an unusually long run for anything pointed at micro caps.
• Systematic rather than index-bound. Dimensional sifts the small end of the US market by its own rules instead of copying a published micro-cap benchmark.dimensional.com
• One of the stronger implementations among the active US equity funds we grade, with risk control and portfolio construction the standout pieces.

• HSMV Low-volatility screening applied where volatility bites: at least 80% of net assets go to US small/mid cap stocks Horizon judges to have low future expected volatility.ftportfolios.com
• Actively managed, so the low-vol call is a live judgment by the sub-adviser instead of a rule waiting on the next scheduled index rebalance.ftportfolios.com
• Roughly 200 holdings spread the bet across the small/mid universe, and the fund distributes on a quarterly schedule.

Worth knowing

• DFMC Thinly traded next to the big index names, so the cost of getting in and out can matter as much as the expense ratio, especially for larger orders.
• It costs more than Dimensional's broad-market siblings, DFAU at 0.12% and DFAC at 0.17%, which own far bigger, more liquid companies.
• Micro caps are the choppy end of the US market, and owning them is the entire job here. The mandate is long-term capital appreciation, not income.

• HSMV The 0.80% expense ratio runs above the typical actively managed US equity fund and several times the cost of cheap core options like DFAU (0.12%) and AVLC (0.15%).
• A small asset base and thin trading tend to mean wider bid-ask spreads than household-name ETFs, which matters most on larger orders.
• Low expected volatility is a target, not a floor. This is still a stock fund that moves with small and mid caps, and it has only been trading since 2020.

Full DFMC profile⁠

Full HSMV profile⁠