In an earlier blog post we recognized Eugene Fama, widely known as the “Father of Modern Finance,” for his long overdue Noble Prize in Economics. His research is the foundation on which Dimensional Fund Advisors was established.
We have long considered Dimensional Fund Advisors’ (DFA) science-backed investment strategies to be superior in the field of investing. We know that picking individual stocks and market-timing are not viable investment strategies. And there is a large body of research supporting this conclusion. Instead, we look to capture what the market has to offer, structuring our portfolios using many of the highly scientific, research-based, funds offered by DFA. While we believe market-timing and stock picking give you a poor chance to “beat the market,” beating the market is not unattainable. DFA has developed a method to do just that. Without trying to predict which way the market is headed, they structure their funds to take advantage of the risk factors in the market—size, price, profitability—seeking to generate higher returns, without increasing risk.
The Barron’s article below, written by Beverly Goodman, chronicles the success Dimensional Fund Advisors. From the early work of newly minted Nobel Prize Laureate, Eugene Fama, to the application of his research by DFA co-founder, David Booth.
We hope you enjoy the article and remain available to discuss this and other family wealth topics at your convenience. Please visit www.aplaceofpossibility.com for more information.