Factors Can Help in Bond Investing. But Choose Carefully.
May 13, 2022
A bond investor’s options today may seem like having to choose between a rock and a hard place. Either settle for low expectations in terms of what you may earn on a bond, or try to reinstate yesterday’s fixed income returns by reaching for yield earned through additional risk. But what if there’s a third...
All Eyes on the Fed? A Look at Federal Funds Rate, Bond Return, and Term Premium
April 14, 2022
US consumer prices were up 7.9% for the year ending February 2022, the largest annual increase since January 1982.1 Against this macroeconomic backdrop of inflation, the monetary policy response of the US Federal Reserve has become the center of attention for many US and global fixed income investors. With Fed officials recently signaling a more hawkish...
Five Things I Know about Investing
April 8, 2022
In this essay, Dartmouth finance professor Kenneth R. French explains five investment principles that he uses as the foundation for a holistic approach to portfolio design. I have been passionate about investing since I started studying finance in 1977. The first investment class I took was dominated by the Capital Asset Pricing Model (CAPM) of...
Intangibles Are Noisier than You Think
April 1, 2022
Suppose you want to estimate the potential salary of a friend who is looking for a job based on her spending so far on educational degrees and professional certificates. The estimated salary might be substantially higher or lower than the actual income she will earn. This is because other factors will also affect her compensation,...
Is Active vs. Passive Actually Passé?
March 25, 2022
As a member of probably the last generation to grow up with a rotary dial phone in the house, I can still recall when there was clear distinction between phones and computers. Phones were utilitarian devices, while computers were gateways to limitless knowledge and entertainment.1 Nowadays, that distinction has dissolved. For many consumers, phones arguably obviate...
The Small Caps That May Be Holding Back Your Portfolio Returns
March 18, 2022
The stock market is off to a rocky start in 2022. Some shares have fallen more than others: Exhibit 1 shows how small caps have lagged large caps in 2021 and into 2022, at least when measured using Russell indices. However, a deeper look shows a subset of small cap stocks drove much of this underperformance....
You Want the Size, Value, and Profitability Premiums … But How?
March 11, 2022
You have made the decision to target the size, value, and profitability premiums in equities, which is great, but it is only a great starting point. There are many questions to consider when incorporating these premiums into real-world asset allocations. How to allocate across premiums and regions? Is it better to get exposure to the...
Why I’ll Always Be Optimistic About the Market
March 4, 2022
By David Booth, Executive Chairman and Founder of Dimensional Fund Advisors It’s hard to believe we’re approaching the end of the second year of this global pandemic. Despite the pain and loss endured by so many all over the world, I hope some positive changes have come from the shock we’ve all been forced to...
Russia, Ukraine & The Stock Market
February 25, 2022
After much speculation about whether Putin and Russia would invade Ukraine, news of the invasion broke Wednesday evening that sent stock prices tumbling. As we watched this geopolitical event unfold Wednesday evening, with our phones notifying us of the stock market tanking, you might have felt that cashing out your investments on Thursday morning would...
Navigating Geopolitical Events
February 24, 2022
This morning, we learned that Russia launched an attack and invaded Ukraine. These recent actions remind us of the underlying uncertainty and geopolitical risk involved when investing in global markets. What will be the long-term impact? Navigating geopolitical events requires expertise and flexibility. Dimensional's systematic active approach adjusts to new information in real-time, including details...