Global Equities
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Global Core Equity Strategy Global Core Equity Trust Unhedged Class Global Core Equity Trust AUD Hedged Class Value Strategy Global Value Trust Large Cap Strategy Global Large Company Trust |
Small Cap Strategy Global Small Company Trust Emerging Markets Strategy Emerging Markets Trust |
Overview
Research reveals that Fama/French's three-factor model holds true for global equity markets just as it did in their studies of the US markets. DFA Australia's global equity strategies provide consistent, targeted exposure to both size and value factors. The purpose of a global portfolio is to reduce the risk of single-country exposure. DFA Australia's global strategies provide this diversification in a cost-effective manner by investing in the relevant US-registered investment vehicles managed by Dimensional Fund Advisors.
Global Core Equity Strategy
Dimensional's global core equity strategy invests in a broad universe of listed securities of companies in developed markets, with a stronger tilt toward small cap stocks and value stocks than in a market-weighted portfolio.
To obtain an increased exposure to small and value companies, Dimensional increases their target weights and decreases the target weights for large and growth companies relative to a market-weighted portfolio.
By spreading the investment gradually across the entire market, the fund can hold stocks for maximum efficiency and minimise counterproductive trading. The result is a market-wide exposure that favours the asset classes that historically have provided higher expected returns.
By not adopting an index approach, Dimensional can practise patient trading, focusing on price rather than time of execution, which can mitigate the effects of momentum and lead to lower trading costs.
The result is a core holding closer to the desired allocation, which can lessen the dependence on satellite holdings to drive expected returns.
For the Global Core Equity Trust AUD Hedged Class Units, generally, most of the strategy's foreign currency exposure is hedged back to the Australian dollar.
Asset Class Strategies
Dimensional has been developing dedicated asset class strategies for over 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 designed to capture the return premiums associated with companies with high book-to-market (BtM) ratios.
Our value portfolios are constructed by first ranking the total market universe by market cap and identifying 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 Global Value Trust in 1999 to provide efficient exposure to value companies listed on the major global stock exchanges.
Large Company Strategy
DFA Australia launched the Global Large Company Trust in 2000. The Global Large Company Trust is designed to be a fundamental component of a global equity portfolio, and its objective is to outperform the MSCI World Index. Investment style flexibility enhances the Trust's performance.
Small Company Strategy
Academic research documents that small companies provide higher expected returns than larger companies in the long term. Dimensional's objective is to deliver the size effect and provide the diversification benefits of investing in small companies worldwide. A good way to accomplish this is to invest in a broadly diversified cross section of small companies in the major international markets.
DFA Australia launched the Global Small Company Trust in 2000 to provide long-term capital appreciation through access to the returns of smaller companies worldwide. By providing exposure to the smallest companies, the aim is to provide the greatest complementarity with global large company strategies. Individual small companies worldwide are thinly traded. As a result, we follow trading procedures that have been developed and refined to trade small companies effectively and economically.
Emerging Markets Strategy
Dimensional's research documents that investing in emerging market companies provides large diversification benefits for Australian investors. We believe that a diversified portfolio of emerging market equities complements a well-structured asset allocation.
Before adding a country to the emerging markets portfolio, we undertake a rigorous review, including a visit by a member of the Investment Committee. First, the country must meet several criteria, including a market capitalisation of at least US$10 billion, sufficient liquidity, and an equity settlement system that ensures simultaneous delivery vs. payment. Dimensional also applies subjective requirements, including fair treatment of foreign investors, well developed property rights, and a commitment to free markets.
DFA Australia launched the Emerging Markets Trust in 2000. The Trust focuses on providing consistent, targeted exposure to the higher expected returns and diversification benefits of large companies in emerging markets. Dimensional is able to provide this exposure to a carefully selected number of approved emerging markets in a cost-effective manner.