A time-tested approach from a leader in multifactor investing

John Hancock Investments has been working with Dimensional Fund Advisors for nearly a decade. Dimensional’s systematic approach to investing is backed by insight gained from decades of academic research and experience implementing rules-based strategies in competitive markets. Today, the company is one of the most well-respected managers of rules-based investing in the industry.

Why Dimensional Fund Advisors?

An idea rooted in academia 

Dimensional Fund Advisors is a pioneer of multifactor investing. It has applied ideas rooted in academia for more than three decades and today it is one of the most well-respected managers in the field. Strategic beta concepts combine multiple factors that may better equip a portfolio to smooth out the variability of returns and improve the likelihood of outperformance across different types of markets.

 

A proven approach 

Dimensional's systematic approach is backed by insight gained from decades of academic research and experience implementing rules-based strategies in competitive markets. Founded in 1981, Dimensional Fund Advisors has built an over $376 billion global asset management business based on the implementation of this research across asset classes.

 

Thoroughly vetted by our team 

John Hancock Investments' relationship with Dimensional and due diligence of their management teams began in 2006, resulting in Dimensional-managed strategies being offered as both individual funds and through our asset allocation portfolios.  

The implementation of academic insight

Much of Dimensional’s approach is based on the groundbreaking academic research of Eugene Fama and Kenneth French , leading financial economists who, today, are members of the firm’s board of directors. Over the years, the company has maintained its close ties to the academic community, and continues to search for ways to translate compelling research into practical investment ideas.

Multifactor investing in practice

Academic research supports the hypothesis that prices reflect all available information; however, different stocks have been shown over time to have different expected returns.1 As the index provider, Dimensional Fund Advisors strives to identify the factors that drive higher expected returns and to add value through constructing indexes that weight those factors accordingly. Additionally, Dimensional considers the operations of ETFs in the design of the indexes, seeking to minimize implementation costs.

Multifactor ETF investing with Dimensional Fund Advisors: Factors driving expected returns

1 Relative price, as measured by the price-to-book ratio; value stocks are those with lower price-to-book ratios.

2 Profitability is a measure of current profitability, based on information from individual companies’ income statements.

Diversification does not guarantee a profit or eliminate the risk of a loss.

To be considered a true factor, a premium must be:

  • Sensible
  • Persistent across time periods
  • Pervasive across markets
  • Robust in the data
  • Cost-effective, to capture in a portfolio

Discover what makes Dimensional “Market Beaters”

Dimensional founder David Booth, Eugene Fama and Kenneth French: a deep dive into the Dimensional's approach ETF investing

Barron’s profiles Dimensional founder David Booth as well as leading academics Eugene Fama and Kenneth French in this deeper dive on the company’s research-oriented approach to investing.
 

Read article here.

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