Prudent investing is a rational process. It involves deciding how much risk to take, then choosing asset classes to match an investor's preferred risk-return tradeoff. We build strategies designed to deliver precise risk dimensions to investors. But we are not a traditional investment manager—and traditional labels do not fit.
Structuring a strategy around compensated risk factors lends purpose to an investor's portfolio. Rather than analyzing individual securities, investing becomes a relatively simple matter of deciding how much to allocate to small, large, value, and growth stocks around the world—and how much term and credit exposure to target in fixed income. By focusing on what matters, Dimensional focuses your efforts.
Traditionally, managers do one of two things: they focus on picking individual securities, the antithesis of diversification, or they hold many securities but mimic arbitrary benchmarks.
Dimensional chooses a different path. It structures strategies based on academic research rather than on speculation or commercial indexes. Small cap strategies target smaller stocks more consistently. Value strategies target value returns with greater focus. As a result, investors can achieve more consistent portfolio structure.
Traditionally, managers do one of two things: they focus on picking individual securities, the antithesis of diversification, or they hold many securities but mimic arbitrary benchmarks.
Dimensional chooses a different path. It structures strategies based on academic research rather than on speculation or commercial indexes. Small cap strategies target smaller stocks more consistently. Value strategies target value returns with greater focus. As a result, investors can achieve more consistent portfolio structure.
Dimensional Management Compared to
Traditional Portfolio Management
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Implementing the Science
Related content from The Library
A transcript of Rex Sinquefield's opening statement
in a debate about active vs. passive management with Donald Yacktman at
the Schwab Institutional conference in San Francisco, October 12, 1995.