Putting You on the Path to Success
In designing our client portfolios, we are free to choose from among thousands of mutual funds and exchange-traded funds. We generally prefer passively managed funds with low expense ratios because we believe they provide the best value for our clients. Although there are many companies to choose from, we rely primarily on Dimensional Fund Advisors (https://us.dimensional.com/). Dimensional is an institutional investment manager that serves more than 200 corporations, college endowments, government organizations, and charitable foundations. Its directors and board members include some of the world's most distinguished academic theorists, including Nobel laureates Merton Miller and Myron Scholes.
What is it that makes Dimensional funds different? Unlike conventional index funds, which merely replicate market indexes, Dimensional funds are designed to provide broad, diversified exposure to specific asset classes, while targeting higher expected returns via innovative trading strategies and portfolio engineering. Some Dimensional funds overweight small cap and value stocks, which have historically outperformed market averages, while some funds incorporate advanced profitability screens and momentum trading algorithms designed to boost returns relative to traditional index funds.
Dimensional also adds value by minimizing transaction costs. Rather than replicating an index in a mechanical fashion, Dimensional uses discount block trades. This results in slight variations in day-to-day market weighting that are not permitted in most index funds. The advantage is that net investment returns are enhanced by reducing trading costs. The effectiveness of this strategy is illustrated by the fact that Dimensional has achieved negative trading costs in illiquid market sectors such as U.S. small company stocks. This translates directly into increased returns for our clients.