Philosophy grounded in Nobel Prize-winning
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We go beyond indexing and active management
in pursuit of higher expected returns.
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Stock pickers and market timers try to outguess the market and look for what they believe are pricing mistakes. Research shows little evidence of any consistent success with these approaches.
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Traditional indexers offer investors the ability to track the market or a subset of the market. Tracking an index leaves you with limited flexibility since index providers tell you (and the fund manager) what to hold and when to buy and sell, which can result in lower returns and higher trading costs. Long periods between index reconstitutions can also lead to style drift - investors may end up holding assets that don't align with an index's stated purpose.
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Dimensional - Since offering its first fund in 1981, drawing insights from financial science and their own research team, Dimensional emphasizes areas of the market that we believe have higher expected returns.
Extensive research, much of it undertaken by Dimensional, has carefully examined the sources of portfolio returns and found that additional returns are likely if value stocks and small cap stocks are overweighted relative to the total equity market, and other factors like profitability are included in the portfolio selection. Both Fama and French and Dimson et al., found evidence for small cap and value effects across U.S., international developed, and emerging markets. They also found a better risk/return ratio when short-term bonds are included in fixed income allocations. |
- Instead of trying to outguess the market, focus on asset classes with higher expected returns. Our portfolios are well diversified, typically invested in over 2,400 stocks using low-cost mutual funds and ETFs, with overweight to small, value, and higher profitability stocks to improve expected returns.
- Thoughtfully allocate between equities (for growth) and fixed income (to reduce portfolio volatility) based on individual goals and risk tolerance.
- Rebalance systematically. Avoid market timing.
- Costs matter. A lot. Own low-cost investments. Minimize transaction costs.
- Taxes matter. A lot. Use tax-advantaged accounts wisely. Realize gains strategically. Harvest losses.
- Simpler is (usually) better.
- Ignore the noise.
Dimensional origins.
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We are independent and free to invest our clients' money – and our own – in whatever mutual funds or ETFs we believe to be the best. We are not beholden to any fund company and never will be. By choice, we work closely with Dimensional Fund Advisors.
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. Board members and consultants include some of the nation's most distinguished academic theorists, including Nobel laureates Eugene Fama, Robert Merton, Myron Scholes, Merton Miller and Kenneth French, Roger Ibbotson, Donald Keim. Dimensional Fund Advisors manages $540 Billion as of September 30, 2022, and has 1,500 employees in 14 global offices.
When Dimensional is not an option, we are perfectly comfortable owning traditional index funds – specifically Vanguard funds. While Dimensional remains our default choice, we own whatever makes the most sense for the client's needs.
Lastly, remember that investing in Dimensional funds simply reflects our preferences; we do not have any formal ties or allegiances to the firm. Our loyalty is only to our clients. If at any point, we believe that a different fund company offers a better option for our clients, we would excitedly incorporate it. In the meantime, we feel fortunate to be able to invest our clients' money – and our own – in Dimensional mutual funds and ETFs.
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. Board members and consultants include some of the nation's most distinguished academic theorists, including Nobel laureates Eugene Fama, Robert Merton, Myron Scholes, Merton Miller and Kenneth French, Roger Ibbotson, Donald Keim. Dimensional Fund Advisors manages $540 Billion as of September 30, 2022, and has 1,500 employees in 14 global offices.
When Dimensional is not an option, we are perfectly comfortable owning traditional index funds – specifically Vanguard funds. While Dimensional remains our default choice, we own whatever makes the most sense for the client's needs.
Lastly, remember that investing in Dimensional funds simply reflects our preferences; we do not have any formal ties or allegiances to the firm. Our loyalty is only to our clients. If at any point, we believe that a different fund company offers a better option for our clients, we would excitedly incorporate it. In the meantime, we feel fortunate to be able to invest our clients' money – and our own – in Dimensional mutual funds and ETFs.