Dimensional

Investment Style: Value

Dimensional Fund Advisors Inc. (DFA Inc.) is a private corporation owned primarily by employees and members of the board of directors. DFA Inc. owns the majority of DFA Australia Limited (DFA Australia), minority interests held by directors and employees of DFA Australia. Dimensional, based in California, is the brand name used collectively for the group's various asset management businesses around the globe.

Dimensional's philosophical beliefs are founded on the evidence provided by academic research into the characteristics of risk and return of investment portfolios. Dimensional believes that riskier companies offer higher expected returns than less risky companies, or that higher returns are the reward for taking higher risks. Global research has shown that equity risk takes two main forms: ‘size' (small companies are riskier than larger ones), and ‘value' (value companies are riskier than growth companies). Dimensional aims to provide pure and consistent exposure to these risk factors through broadly-diversified value and small-cap portfolios. A value bias is expected over the long term with market-cap biases tailored to client needs.

Dimensional's investment process is purely quantitative. Qualitative involvement arises during the data input stage where portfolio managers clean the incoming data to ensure integrity and provide the most accurate information. The first step is to design the target portfolio which will yield the desired level of tilt toward value (high Book to Market (BtM)) and small-cap.

To construct the portfolio, the market is divided into a number of BtM and size categories. To achieve a value tilt relative to the market, the portfolio's target weights are increased gradually for stocks in the value (highest BtM) category, and decreased for those in the growth (lowest BtM) category.

DFA Australia's investment team consists of a portfolio management team, led by Senior Portfolio Manager Graham Lennon, and a trading desk.