- Why Dimensional
Dimensional's Global Portfolios offer a disciplined, diversified, and low-cost approach that is valuable to a variety of investors, from 401(k) participants to individual investors with financial advisors. With more than seventy strategies around the globe, Dimensional provides focused and consistent exposure to targeted market segments. The Global Portfolios currently assemble over a dozen of these strategies in specific combinations, with the objectives of maximizing expected return for given levels of risk and enhancing portfolio stability.
The strategies that underlie each of the Global Portfolios provide broader exposure to global markets than is typically achieved through traditional active or index management. As of October 31, 2011, through investment in underlying strategies, Dimensional's Global Portfolios are exposed to more than 10,000 securities in over forty countries. Worldwide diversification minimizes the potential short-term impact of any one company, asset class, or country, thus reducing overall portfolio risk while seeking capital market returns.
The global strategies employ Dimensional's applied core equity strategy and a market-driven approach to fixed income. This allows investors to achieve the same global exposures as with an individual component approach, but in a more efficient manner that minimizes turnover and transaction costs. The portfolios target the dimensions of higher expected returns. More specifically, they are designed to provide enhanced exposure to smaller and higher book-to-market (BtM) stocks around the world.
The Global Portfolios provide investors access to a single, balanced portfolio that may be suited to their tolerance for risk. The portfolios are attractive for any investor looking for a broadly diversified investment with built-in rebalancing.
The Global Portfolios can be an effective and fiduciary choice for defined contribution plans of all types and sizes. The Global Portfolios have low fees and expenses—an area of increasing focus by regulatory bodies. Marketwide diversification helps manage the down-side risk associated with any one security, sector, or country. The potential long-term value added over the benchmarks and index funds may increase the plan participants' chances of reaching their retirement goals. These funds may be particularly appropriate as default-option investment vehicles, due to their comprehensive characteristics.
For most plans, the large majority of defined contribution participants may lack the time, inclination, or skill set needed to manage their own retirement investment portfolio. Dimensional's Global Portfolios utilize professionals trained in academic investment theory to choose specific asset allocations that provide proper diversification, monitor asset class performance, and rebalance regularly.
While popular with defined contribution plans, the Global Portfolios are also appropriate for any financial advisor or institution looking for a single, broadly diversified vehicle to act as their portfolio core, if not their entire portfolio. Advisors can reduce transaction fees by purchasing one diversified portfolio rather than the myriad of components they normally choose. Foundations, endowments, and pension plans can equally benefit from the low-cost, value-added approach. The Global Portfolios are systematically rebalanced, further lowering the cost investors would otherwise incur from rebalancing their own portfolios, not to mention the energy and resources spent determining when and how to rebalance.
Dimensional's four Global Portfolios are all broadly diversified (including exposure to US, non-US developed and emerging market equities), but each targets different risk preferences.
The Dimensional Global Allocation 25/75 Portfolio is designed to seek total return consistent with current income and preservation of capital with some capital appreciation. The Portfolio’s target allocation is generally 25% equity funds and 75% fixed income funds.
The Dimensional Global Allocation 60/40 Portfolio is designed to seek total return consisting of capital appreciation and current income. The Portfolio’s target allocation is generally 60% equity funds and 40% fixed income funds.
The Dimensional Global Equity Portfolio and Selectively Hedged Global Equity Portfolio are both designed to achieve long-term capital appreciation. Both Portfolios generally target 100% exposure to equity funds. The Selectively Hedged Global Equity Portfolio has the highest exposure to emerging markets stocks of the four portfolios and utilizes selective currency hedging.
The principal risks of investing in these portfolios may include any of the following: market risk, foreign securities and currencies risk, small company risk, interest rate risk, credit risk, income risk, and fund of funds risk. These risks are fully described in the prospectus in the section entitled "Principal Risks."
Diversification does not eliminate the risk of market loss.