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Investment Philosophy

Four Fundamental Principles

The following four fundamental principles guide our portfolio development and investment management decisions by our investment committee:

  1. Application of our investing philosophy based on Nobel Prize-winning evidence: Tilting allocations to pursue higher expected returns
    • Factor 1: Equity has a higher expected risk and return characteristics than fixed income over time.
    • Factor 2: Small company stocks outperform large company stocks over time.
    • Factor 3: Value stocks outperform growth stocks over time.
    • Factor 4: Profitable companies outperform less profitable companies over time.

    Guided by these ideas, our portfolios tilt towards the asset classes that have historically proven to provide a higher expected return.

  2. Diversification to reduce exposure risks: holding a broad global mix of securities, asset classes, sectors, and countries. While slightly overweighting towards allocations supported by our evidence-based investing strategies, each of our portfolios represents a broad global diversification to maximize global opportunity and avoid overexposure or reliance on niche performance.
  3. Own the market: maintaining holdings of a wide range of securities from all asset classes that meet the factors derived from our evidence-based investment strategies. By casting a wide net, our portfolios avoid individual stock or fund selection within each asset class. Instead, we focus on owning the entire market as a whole to further enhance diversification.
  4. We can only control what we can control: structuring portfolios to minimize the impact of controllable factors. Because there are many things that can impact the overall performance of a portfolio—some we can control, and some we cannot—we focus on insulating our investments from the things we can control. This includes taxes, fees, time horizon, overexposure to a single sector or over-weighted in any single investment.

We provide this evidence-based investment strategy to individual investors through a series of portfolios consisting of exclusive Dimensional Fund Advisors (DFA) mutual funds. Each portfolio offers tax- and fee-efficient investments that are managed based on decades of Nobel Prize-winning financial, economic, and consumer behavior research. Click here to learn more about our portfolios.