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Portfolios

Dimensional Fund Portfolio Models

Valor Capital Management currently manages three families of Dimensional investment portfolio models: Pre-Tax, Post-Tax and Global Allocations. Comprised of 23 total portfolio offerings, each is based on the tax-qualification of the assets being managed and the investor’s level of comfort in exposure to market volatility.

Tilting towards the evidence

Generally, these categories have performed as follows on a long-term investment basis:

  • Equities outperform fixed income
  • Small caps outperform large caps
  • Value stocks outperform growth stocks
  • More profitable companies outperform less profitable companies

These four factors are used to create optimal and efficient portfolios for each of the portfolio families. However, how the assets are managed within those models comes with different considerations.

The Pre-Tax Model is appropriate for investors seeking growth potential within their pre-tax accounts, such as 401(k)s, IRAs, 403(b)s, TSP, and similar. Each of the seven risk-based portfolios is built with a selection of Dimensional Fund Advisors mutual funds to achieve a low-cost, pure asset class exposure for broad market diversification while overweighting securities that have shown historical characteristics of higher expected return.

  • Pre-Tax Fixed Income
  • Pre-Tax Stable
  • Pre-Tax Conservative
  • Pre-Tax Balanced
  • Pre-Tax Moderate
  • Pre-Tax Growth
  • Pre-Tax Equity

The Post-Tax Model is appropriate for investors seeking tax-efficient growth potential for their post-tax accounts. Each of the of seven risk-based tax-managed portfolios is built with a selection of Dimensional Fund Advisors mutual funds that strives to provide low-cost, pure asset class diversification while overweighting securities that have shown historical characteristics of higher expected return. Utilizing tax-loss harvesting and dividend management as strategies for tax management, these portfolios are designed to avoid short-term capital gains to maximize post-tax returns while maintaining the desired asset class exposure.

  • Tax-Managed Fixed Income
  • Tax-Managed Stable
  • Tax-Managed Conservative
  • Tax-Managed Balanced
  • Tax-Managed Moderate
  • Tax-Managed Growth
  • Tax-Managed Equity

The Socially Responsible Model focuses on socially responsible investing. DFA Funds’ socially responsible mutual funds have considered the United States Conference of Catholic Bishops (USCCB) socially responsible investment guidelines in construction of its socially responsible models.  Each of the Socially Responsible Models, with the exception of Stable Model, are available with an asset allocation containing REIT’s.

  • Socially Responsible Stable
  • Socially Responsible Conservative
  • Socially Responsible Balanced
  • Socially Responsible Moderate
  • Socially Responsible Growth
  • Socially Responsible Equity

The Sustainable Model is a series of model portfolios that are compromised of DFA Funds’ sustainability mutual funds that screen investments based on key sustainability issues such as environmental impact from company emissions, including for example, greenhouse gas emissions and potential emission from fossil fuel reserves. Each of the Sustainable Models, with the exception of Stable Model, are available with an asset allocation containing REIT’s.

  • Sustainable Stable
  • Sustainable Conservative
  • Sustainable Balanced
  • Sustainable Moderate
  • Sustainable Growth
  • Sustainable Equity

The Global Allocation Model is appropriate for investors with less than $75,000 who seek a broadly diversified investment. Each of the six risk-based fund-of-fund portfolios has a built-in rebalancing mechanism to accommodate smaller account sizes. Minimum investment size needed is $5,000 per account.

  • Global Stable Portfolio
  • Global Conservative Portfolio
  • Global Balanced Portfolio
  • Global Moderate Portfolio
  • Global Growth Portfolio
  • Global Equity Portfolio

The ETF Model is appropriate for investors seeking the tax efficiency and daily price tracking of ETFs. Each of the seven risk-based portfolios is built with select ETFs to achieve a low-cost, pure asset class exposure for broad market diversification while overweighting securities that have shown historical characteristics of higher expected return.

  • ETF Diversified Fixed Income Portfolio
  • ETF Stable Portfolio
  • ETF Conservative Portfolio
  • ETF Balanced Portfolio
  • ETF Moderate Portfolio
  • ETF Growth Portfolio
  • ETF 100% Equity Portfolio

The Five-Year Defined Maturity ETF Ladder utilizes defined maturity investment grade bond ETFs such as Invesco Bulletshares, intended to create a lower cost alternative to a traditional bond ladder.