Flat Fee Portfolios is proud to offer access to Dimensional Fund Advisors (DFA) as part of our low-cost investment strategies.
The underlying philosophy of Dimensional Funds is that markets work and a relatively small number of factors drive investors’ returns from equities: market exposure, size premium, and a value premium. With respect to these dimensions of return, the overall portfolio structure determines performance.
Source: Dimensional Fund Advisors study (2002) of 44 institutional equity pension plans with $452 billion total assets. Factor analysis run over various time periods, averaging nine years. Total assets based on total plan dollar amounts as of year end 2001. Average explanatory power (R2) is for the Fama/French equity benchmark universe.
The academic community offers a wealth of insight into how markets work and the sources of expected returns. DFA is built upon the academic research of Eugene Fama, a 2013 Nobel laureate in Economic Sciences and finance professor at the University of Chicago, and Ken French, professor at Dartmouth.
Their research shows that over longer periods of time “value” stocks tends to outperform “growth” stocks and small companies tend to outperform larger ones. Lastly, profitable companies tend to outperform less profitable companies. DFA has integrated this knowledge into their strategies and focus on efficient implementation in competitive markets.
Multifactor data provided by Fama/French. SmB and HmL research factors. Past performance is not a guarantee of future results. Values change frequently, and past performance may not be repeated. Securities of small firms are often less liquid than those of large companies. As a result, small company stocks may fluctuate relatively more in price. Even a long-term investment approach cannot guarantee a profit. Economic, political, and issuer-specific events will cause the value of securities, and the funds that own them, to rise or fall. Because the value of investments will fluctuate, there is a risk that investors will lose money. Source: Dimensional Fund Advisors