Australian Equities
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Core Equity Strategy Australian Core Equity Trust Large Cap Strategy Australian Large Company Trust |
Small Cap Strategy Australian Small Company Trust Value Strategy Australian Value Trust |
Applied Core Equity Strategies
Asset allocation is traditionally achieved in two ways: By owning a core portfolio that replicates the characteristics of the total equity market or by building a portfolio from component asset classes. Our core strategies adopt the total market approach by targeting return premiums across multiple asset classes of the equity market.
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Australian Core Equity Strategy
The Australian Core Equity strategy is designed to capture the returns from the broad Australian equities market, while delivering a higher exposure to small cap and value premiums than in a market-weighted portfolio.
To obtain increased exposure to small and value companies, Dimensional increases the target weights for these companies and decreases the target weights for large and growth companies relative to a market-weighted portfolio.
Owning a core portfolio reduces reliance on asset class strategies and provides targeted factor exposure that can result in lower overall operating expenses and rebalancing costs. A smoother and broader exposure also reduces trading costs and capital gains caused by style drift or the reconstitution of indices.
Asset Class Strategies
Dimensional has been developing dedicated asset class strategies for the last twenty five years. Whether used as "satellite" complements to a core portfolio or as building blocks in a component-based asset allocation, these strategies offer broadly diversified exposure to the returns of specific individual asset classes.
Value Strategy
Dimensional's value strategy is based on the Fama/French research in multifactor portfolios and is designed to capture the return premiums associated with companies with high book-to-market (BtM) ratios. To construct our value portfolio, we first rank the total market universe by market cap and identify those companies that fall within the defined size range. This universe is then ranked by BtM ratio. Value stocks must have BtM ratios within a defined range of the value-weighted universe ranked by BtM. This ranking excludes firms with negative or zero book values.
DFA Australia launched the Australian Value Trust in 1999 to provide efficient exposure to value companies listed on the Australian Stock Exchange.
Large Company Strategy
DFA Australia launched the Australian Large Company Trust in 2000. The trust is designed to be a fundamental component of an Australian equity portfolio, and aims to outperform the S&P/ASX 100 Index on an after-tax basis. Investment style flexibility and taxation deferral enhance the Trust's performance.
Small Company Strategy
Dimensional has been a pioneer in small stock research since 1981. Research documents that over the long term, small companies provide higher expected returns than larger companies. Dimensional's objective is to deliver a small cap performance premium and provide the diversification benefit of investing in small companies.
The best way to accomplish this is to invest in a broadly diversified cross section of small companies in the Australian market.
DFA Australia introduced the Australian Small Company Trust in 2000 to provide long-term capital appreciation through access to the returns of smaller companies in Australia.
Tax Management
For the Australian equity strategies, DFA Australia seeks to maximise the after-tax value of an investment by managing the trusts in a manner that aims to defer the realisation of net capital gains where possible and to manage dividend income.