Nobel-Worthy Ideas
Wouldn’t it be nice to hire a team of Nobel Laureates to manage your investment portfolio?
Of course, such an opportunity doesn't exist. We can, however, provide you with the next best thing through our relationship with Dimensional Fund Advisors (DFA).
“It’s about ideas!” – That’s the mentality of David Booth, founder of DFA, and I certainly don’t know of another fund company that has been more about ideas. And not just any ideas, but the best thinking coming out of academic research in economics.
Because of this focus, DFA has, from the beginning, filled its board of directors and advisory committees with top thinkers in the field. Dimensional has recruited several Nobel Laureates, including such luminaries as Gene Fama, Myron Scholes, Merton Miller, and Robert Merton.
Few economists have had a greater influence on how we think about the markets and structure client portfolios than Gene Fama. Gene was one of the developers of the notion of efficient markets – in fact, he first coined that phrase.
Working with Ken French of Dartmouth University, Fama also developed the “three-factor” model for explaining the cross-section of stock market returns in 1992.
Dimensional Fund Advisors (DFA) was founded in 1981 by David Booth and Rex Sinquefield to apply academic research on capital market behavior to the practical world of managing investment portfolios.
DFA maintains close links with the University of Chicago and other research centers for financial economics.
DFA manages approximately $679 billion in assets globally as of December 31, 2021, offering its low-cost institutional mutual funds to individual investors through a network of selected investment advisory firms.
“It’s about ideas!” – That’s the mentality of David Booth, founder of DFA, and I certainly don’t know of another fund company that has been more about ideas. And not just any ideas, but the best thinking coming out of academic research in economics.
Because of this focus, DFA has, from the beginning, filled its board of directors and advisory committees with top thinkers in the field. Dimensional has recruited several Nobel Laureates, including such luminaries as Gene Fama, Myron Scholes, Merton Miller, and Robert Merton.
Few economists have had a greater influence on how we think about the markets and structure client portfolios than Gene Fama. Gene was one of the developers of the notion of efficient markets – in fact, he first coined that phrase.
Working with Ken French of Dartmouth University, Fama also developed the “three-factor” model for explaining the cross-section of stock market returns in 1992.
Dimensional Fund Advisors (DFA) was founded in 1981 by David Booth and Rex Sinquefield to apply academic research on capital market behavior to the practical world of managing investment portfolios.
DFA maintains close links with the University of Chicago and other research centers for financial economics.
DFA manages approximately $679 billion in assets globally as of December 31, 2021, offering its low-cost institutional mutual funds to individual investors through a network of selected investment advisory firms.
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Dimensional’s approach is firmly rooted in the belief that markets are efficient and that investors’ returns are determined principally by asset allocation decisions, not market timing or stock picking. All DFA portfolios employ a strategy designed to capture the return behavior of an entire asset class.
While conventional index managers also employ this approach, DFA differs in several key respects. Dimensional funds do not necessarily track popular market benchmarks but are designed to capture separate dimensions of worldwide returns, which are accompanied by independent sources of risk. These dimensions are identified by rigorous academic research, often conducted by the leading financial economists with whom DFA maintains a relationship.
While conventional index managers also employ this approach, DFA differs in several key respects. Dimensional funds do not necessarily track popular market benchmarks but are designed to capture separate dimensions of worldwide returns, which are accompanied by independent sources of risk. These dimensions are identified by rigorous academic research, often conducted by the leading financial economists with whom DFA maintains a relationship.
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DFA also places great emphasis on minimizing trading costs. Unlike conventional managers who replicate an index in a mechanical fashion, Dimensional funds employ a sophisticated trading strategy that allows for slight variations in day-to-day portfolio balance versus a market index in return for substantial cost reductions and improved total return.
