Dimensional Investing is about implementing the great ideas in finance for our clients.

Dimensional Global Firms* at a Glance
As at 30 September 2017

Years since founding

In firmwide assets under management, USD (in billions)

Offices in eight countries

Employees globally

01

An enduring belief in the

Power of  Markets

Capital Markets Have Rewarded
Long-Term Investors
Growth of $1 USD, Jan. 1970–Dec. 2016

For illustrative purposes only. Indices are not available for direct investment, therefore their performance does not reflect the expenses associated with the management of an actual portfolio.

Past performance is not a guarantee of future results. Performance may increase or decrease as a result of currency fluctuations.

Source reference: In US dollars. World Equities is the MSCI World Index (gross div.). US Inflation is measured as changes in the US Consumer Price Index. US Consumer Price Index data is provided by the US Department of Labor Bureau of Labor Statistics. Treasury Bills is the IA SBBI US 30 Day TBill TR USD, provided by Ibbotson Associates via Morningstar Direct. Long-Term Government Bonds is the IA SBBI US LT Govt TR USD, provided by Ibbotson Associates via Morningstar Direct. MSCI World Index data provided by MSCI.

At Dimensional, our investment approach is based on a belief in markets.

Rather than relying on futile forecasting or trying to outguess others, we draw information about expected returns from the market itself—letting the collective knowledge of its millions of buyers and sellers set security prices.

Letting markets do what they do best—drive information into prices—frees us to spend time where we believe we have an advantage, namely in how we interpret the research, how we design and manage portfolios, and how we service our clients. It means we take a less subjective, more systematic approach to investing—an approach we can implement consistently and investors can understand and stick with, even in challenging market environments.

Embrace Market Pricing
Trading Volume

The market is an effective information-processing machine. Market participants buy and sell securities millions of times per day in the world markets. The real-time information they bring helps set security prices.

In USD. Source: World Federation of Exchanges members, affiliates, correspondents and non-members. Trade data from the global electronic order book. Daily averages were computed using year-to-date totals as of 31 December 2016, divided by 250 as an approximate number of annual trading days.

David Booth
David Booth
Founder and Executive Chairman
“The number of managers that can successfully pick stocks are fewer than you’d expect by chance. So, why even play that game? You don’t need to.”

02

Applying insights from

FINANCIAL SCIENCE

Breakthroughs in Modern Finance
  • 1966Efficient Market Hypothesis
    Efficient Market Hypothesis
    Eugene Fama
    Nobel laureate, 2013
    Professor, University of Chicago
    Eugene Fama’s efficient market hypothesis marks a pivotal moment for modern finance. The essence of the argument can be described by the simple statement that security prices reflect all available information.
  • 1973Intertemporal CAPM
    Intertemporal CAPM
    Robert Merton
    Nobel laureate, 1997
    Professor, MIT
    The ICAPM set up a theoretical framework for how multiple sources of risk could arise. It expanded on the one-period CAPM model where the only priced risk was market beta.
    Robert Merton
    Nobel laureate, 1997
    Professor, MIT
  • 1981Small Cap Investing
    Small Cap Investing
    Dimensional Fund Advisors
    David Booth, Founder
    and Executive Chairman
    Dimensional pioneers small cap investing with the launch of its first strategy, which offers investors diversified, efficient access to small company stocks.
    Dimensional Fund Advisors
    David Booth, Founder
    and Co-CEO
    1981 Dimensional Fund Advisors LP Founded
  • 1983Term Structure
    Term Structure
    Eugene Fama
    Nobel laureate, 2013
    Professor, University of Chicago
    Research shows implied forward interest rates provide information on expected term premiums in fixed income.
    Eugene Fama
    Nobel laureate, 2013
    Professor, University of Chicago
  • 1992Value Breakthrough
    Value Breakthrough
    Eugene Fama
    Nobel laureate, 2013
    Professor, University of Chicago
    Kenneth French
    Professor, Dartmouth College
    Eugene Fama and Kenneth French develop the three-factor asset pricing model, which identifies market, size and price (value) factors as the principal drivers of equity returns.
    Eugene Fama
    Nobel laureate, 2013
    Professor, University of Chicago
    Kenneth French
    Professor, Dartmouth College
  • 2012Profitability
    Profitability
    Eugene Fama
    Nobel laureate, 2013
    Professor, University of Chicago
    Kenneth French
    Professor, Dartmouth College
    Robert Novy-Marx
    Professor, University of Rochester
    A body of academic research led to identifying profitability as a dimension of higher expected returns that can be pursued across equity markets.
    Eugene Fama
    Nobel laureate, 2013
    Professor, University of Chicago
    Kenneth French
    Professor, Dartmouth College
    Robert Novy-Marx
    Professor, University of Rochester
  • Today
    Dimensional’s Research and Investment teams draw insight from academia, but what sets us apart is how we interpret, test and apply that research to practical investment solutions for our clients.
  • Tomorrow
    ...
    Dimensional was built around a set of ideas bigger than the firm itself. With a confidence in markets, deep connections to the academic community and a focus on implementation, we go where the science leads, and continue to pursue new insights, both large and small, that can benefit our clients.

“Dimensional” refers to the Dimensional separate but affiliated entities generally, rather than to one particular entity. These entities are Dimensional Fund Advisors LP, Dimensional Fund Advisors Ltd., DFA Australia Limited, Dimensional Fund Advisors Canada ULC, Dimensional Fund Advisors Pte. Ltd., and Dimensional Japan Ltd.

Eugene Fama and Kenneth French are members of the Board of Directors of the general partner of, and provide consulting services to, Dimensional Fund Advisors LP. Robert Merton and Robert Novy-Marx provide consulting services to Dimensional Fund Advisors LP.

Dimensional’s investment approach is grounded in economic theory and backed by decades of empirical research.

Our internal team of researchers works closely with leading financial economists to better understand where returns come from.

Research has shown that securities that offer higher expected returns share certain characteristics, which we call dimensions. To be considered a dimension, these characteristics must be sensible, persistent over time, pervasive across markets and cost-effective to capture.

The Evolution of Indexing and Dimensional
Eugene Fama
Eugene Fama
Nobel laureate, 2013 Professor, University of Chicago; Dimensional Director; Consultant, Dimensional Fund Advisors LP
“We’re very careful in looking at new research that comes along and making sure it’s robust.”

Understanding what drives returns is the starting point. From here, we focus on fine-tuning our method of capturing them.

We structure broadly diversified portfolios that emphasise the dimensions of higher expected returns, while addressing the tradeoffs that arise when executing portfolios.

Every day our portfolio managers and traders seek to balance costs against expected returns and diversification. We work for the slightest expected gain, as every incremental improvement can add up over time.

THE GAP BETWEEN REALITY
AND A MODEL
null
Limitations of the Model False Positives Insights MODEL REALITY
Academic models provide useful insight, but they are incomplete. It’s in the gap between reality and a model where sound judgment and experience matter. Play Watch Dimensional Stories: Models
(03:07)
Gerard O
Gerard O'Reilly
Co-Chief Executive Officer and Chief Investment Officer
“The nuance and expertise is where you take knowledge and information and implement it in a real test, not in the backtest.”

03

A commitment

TO OUR CLIENTS

The Global Financial Crisis and Its Aftermath
A key to a good long-term investment experience is being able to stay with your investment philosophy, even during tough times. During the rocky 2008–2012 period, many investors sold their equity funds. Within the Dimensional Global Firms*, equity funds had inflows throughout the period, which could suggest that in aggregate investors were prepared to withstand the market’s movements in order to pursue long-term results.
Equity Flows Mobile

For illustrative purposes only. Tracking a USD $100 investment in global equities (MSCI World Index) to illustrate the uncertainty in markets. Indices are not available for direct investment, therefore their performance does not reflect the expenses associated with the management of an actual portfolio..

Past performance is not a guarantee of future results. Performance may increase or decrease as a result of currency fluctuations.

Source reference: In USD. MSCI World Index data provided by MSCI.

Dimensional Global Equity Flows include flows from all Dimensional commingled funds with the exception of Balanced, Target Date and Fixed Income funds. A flow is any trade that is a purchase sell, exchange purchase, exchange sell, dividend, long-term capital gain or short-term capital gain. This excludes any flows from other DFA mutual funds. Each flow is converted to USD on the trade date using WM Reuters London Close FX rates.

Dimensional Investing is about providing a successful investment experience.

That means more than considering investment returns. It means offering peace of mind knowing that a transparent approach backed by decades of research is powering every decision.

Markets go up and they go down. The goal of Dimensional Investing is to help people be prepared, so they can stick with their plan.

Institutional Investor’s
2016 Money Masters
Dave Butler
DAVE BUTLER
Co-Chief Executive Officer and Head of Global Financial Advisor Services
“The client experience has always been, and will continue to be, why we do what we do.”

Investments involve risks. The investment return and principal value of an investment may fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original value. Past performance is not a guarantee of future results. There is no guarantee strategies will be successful.

Issued by Dimensional Fund Advisors Ltd. (DFAL), 20 Triton Street, Regent’s Place, London, NW1 3BF. Company Number 02569601. DFAL is authorised and regulated by the Financial Conduct Authority (FCA) - Firm Reference No. 150100.

DFAL does not give financial advice. You are responsible for deciding whether an investment is suitable for your personal circumstances, and we recommend that a financial adviser helps you with that decision. Please read the ‘Important Information’.

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This material is provided for information purposes use only. It does not constitute an invitation or offer to subscribe for or purchase any of the products or services mentioned. It is the responsibility of any persons wishing to make a purchase to inform themselves of and observe all applicable laws and regulations. Any entity responsible for forwarding this material to other parties takes responsibility for ensuring compliance with all financial promotion laws, rules and regulations. It is not intended to provide a sufficient basis on which to make an investment decision. Information and opinions presented in this material have been obtained or derived from sources believed by DFAL to be reliable, but DFAL makes no representation as to their accuracy or completeness. DFAL has reasonable grounds to believe that all factual information herein is true as at the date of this document. DFAL accepts no liability for loss arising from the use of this material.

*“Dimensional Global Firms” refers to the Dimensional separate but affiliated entities generally, rather than to one particular entity. These entities are Dimensional Fund Advisors LP, Dimensional Fund Advisors Ltd., DFA Australia Limited, Dimensional Fund Advisors Canada ULC, Dimensional Fund Advisors Pte. Ltd., and Dimensional Japan Ltd. Dimensional Directors refers to the Board of Directors of the general partner of Dimensional Fund Advisors LP.

None of the other Dimensional Global Firms are currently licensed by, registered with, or supervised by the Financial Conduct Authority.

The information provided is not intended to provide a sufficient basis on which to make an investment decision.

Eugene Fama, Kenneth French, Robert Merton, and Robert Novy-Marx provide consulting services to an affiliate of Dimensional Fund Advisors Ltd. Eugene Fama and Kenneth French also serve on the board of directors of an affiliate of Dimensional Fund Advisors Ltd.