Integration
The latest and perhaps most complete manifestation of Dimensional's investing paradigm is its core equity strategies. Self-contained and expansive, the new core strategies are engineered to minimize the routine costs of asset allocation. Applying a multifactor framework to an overall portfolio, Dimensional's advanced core technology seeks to efficiently capture the compensated dimensions of returns that capital markets provide.
| More Efficient Market Coverage |
| The market, sorted along size and value/growth. |
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-Plotted in two dimensions, the market appears as a massive,
diverse array of investment opportunities. -Often when using traditional index funds in a portfolio, overlapping areas and gaps can occur, since attempts to achieve diversification and risk factor exposure result in redundant or inefficient allocations. -The shaded areas represent Dimensional's investment strategy. For illustrative purposes only. Market is as of April 30, 2007. All securities listed on the Australian Stock Exchange. |
Each core strategy targets the entire stock market as its eligible universe. But unlike traditional approaches, the securities are not held in their market value proportions. The portfolios increase the relative weight of small cap and value stocks, where expected returns are greater. Because the architecture is seamlessly integrated and includes the full range of securities, the costs normally associated with maintaining multiple vehicles are greatly reduced.
By smoothing away the redundant holdings and filling in the missing securities, the core strategies form a strong foundation that can increase the coherence of any allocation. Like all Dimensional strategies, they are designed to capitalize on opportunities presented by broad economic factors, opening new and flexible solutions to everyday investment challenges.