Targeting Dimensions of Returns

By: Curt Stowers

Just about everyone has their thoughts on what the “best” investment strategy is.  While I don’t claim that the philosophy F5 Financial Planning uses is “the best”, I am confident that the strategy that we employ has solid foundations based on the academic research of Fama and French.

Our investment strategy is based on exploiting factors that are persistent and pervasive over time.  These factors include:

  • Equities versus fixed income
  • Small versus big
  • Value versus growth
  • Profitable versus unprofitable

We use Dimensional Fund Advisors (DFA) core funds extensively in our portfolio construction.  Do they guarantee success?  ABOSLUTELY NOT!  However, they do allow us to target market returns AND maximize our potential to capture the aforementioned returns.  The article shown below describes how this approach has performed over the past decade.  Interestingly even though the factors have NOT been as positive as historical averages, the approach has closely mirrored the overall market performance.

Successful investors recognize that investing is a long term proposition guided by and Investment Policy Statement (IPS).  Feel free to reach out if you have any questions after reviewing the attached.

Curt

Strategy_Spot_US_Core_Equity_Portfolios

You can download a copy of the above article here

 

At F5 Financial Planning we focus on helping individuals and families find balance between faith, friends and family, fitness and finance.  We make sure that they have the financial freedom to enjoy those things in life that are important to them.  And while we believe the left-brain facts and data are critical; we work with our clients to get them in the right state of mind to focus on the goals they want to achieve.

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