Indexing has its benefits, including broad diversification, greater transparency, and lower costs. However, trying to closely track a commercial index also creates constraints that can limit your return potential. There may be a better way to invest, one that combines the benefits of indexing with the opportunity to outperform benchmarks.
In the upcoming webcast, Put Financial Science to Work for Your Clients, Gerard O’Reilly, co-chief executive officer and chief investment officer, Dimensional Fund Advisors, will discuss Dimensional’s signature approach to factor-based investing.
For example, Dimensional ETFs offers a line of smart beta or factor-based strategies, including the Dimensional US Equity ETF (NYSE Arca: DFUS), the Dimensional US Core Equity 2 ETF (NYSE Arca: DFAC), the Dimensional US Small Cap ETF (NYSE Arca: DFAS), and the Dimensional US Targeted Value ETF (NYSE Arca: DFAT).
These more recently launched ETFs are part of the firm’s plan to convert tax-managed mutual funds into ETFs, which offer investors an additional tool to manage capital gains, supporting the funds’ goal of delivering higher after-tax returns by minimizing tax impact.
Dimensional’s investment strategies seek to harness a consistent, broadly diversified, and systematic approach that aims to outperform the market without outguessing the market. Strategies within Dimensional’s suite of ETFs have varying tilts from market weights to securities that offer higher expected returns, such as small-cap, value, and high profitability securities.
Dimensional ETFs now provide a range of equity solutions that include market-wide core equity portfolios with varying degrees of emphasis on drivers of expected returns and component solutions, such as value and small-cap portfolios. This range of strategies provides more customization in asset allocation, which can help financial professionals meet the specific investment goals and needs of their diverse investor bases.
Financial advisors who are interested in learning more about factor-based investments can register for the Tuesday, March 29 webcast here.