DFMC vs NBSM

DFMCAU.S. Micro Cap Portfolio ETF

NBSMDNeuberger Berman Small-Mid Cap 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.

NBSM Old-school stock picking in small- and mid-cap land: about 80 names chosen by bottom-up fundamental research hunting undervalued companies, measured against the Russell 2500 rather than copying it.

Stated mandate

DFMC The Portfolio seeks long-term capital appreciation.

NBSM To pursue its goal, the Fund normally invests 80% of net assets in small- and mid-capitalization securities. Managers use bottom-up fundamental analysis to identify undervalued companies and manage risk through broad issuer and industry diversification.

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.

• NBSM Real conviction, not index cloning. Roughly 80 holdings against a benchmark that spans thousands, so each pick has to earn its seat.
• The mandate is specific and the portfolio honors it: normally 80% of net assets in small- and mid-cap stocks, primarily US, with up to 10% allowed abroad.
• Concentration with guardrails. Managers spread risk across issuers and industries instead of betting the fund on one corner of the market.
• A value tilt where it still has room to work: undervalued smaller companies get less analyst coverage than mega caps, which is the case for paying an active manager.

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.

• NBSM Active pricing. The 0.75% expense ratio sits above the typical active US equity ETF, and above FFSM (0.43%) and CGMM (0.51%), which measure against the same Russell 2500 benchmark.
• Launched in 2024, so the record is short. There is not yet a long history across different market regimes to judge the process by.
• Small and mid caps move harder in both directions than large caps, and this fund trades moderately rather than heavily, so limit orders are your friend.

Full DFMC profile⁠

Full NBSM profile⁠