At FinSym Partners we have learned there are certain key factors in the market that have proven to help drive higher returns over time. We use this philosophy to structure our clients’ portfolios to take advantage of that.
We have found that Dimensional Funds shares our belief and they have years of scientific and academic research that supports these “dimensions” of higher returns. These “dimensions” are as follows:
- Equity Premium – The stock market provides higher return than bonds
- Company Size – Small cap companies have outperformed other stocks
- Relative Price – Value stocks have outperformed other stocks
- Profitability – Higher profit companies outperform other stocks
- Diversification – Trying to pick individual stocks is akin to gambling; diversification is imperative to maximize returns while appropriately minimizing risk
Dimensional creates funds to take advantage of those premiums at a low cost and without the risk of trying to predict the next superstar stock. These funds are diversified across the market with tilts towards equities that have the above attributes. While we don’t always focus on Dimensional, we have found their funds tend to meet the needs of our clients.