Dimensional Launches Wealth Models Designed to Guide Asset Allocation Decisions

Dimensional Fund Advisors, a global leader in systematic factor investing, is further extending the application of its robust investment principles to asset allocation by launching five series of Wealth Models designed to meet the needs and preferences of a broad range of investors: Core, Core Plus, Tax-Sensitive, Sustainability, and Social Wealth Models. Each set of models provides six combinations of equity and fixed income, ranging from 100 percent equity to 100 percent fixed income in 20 percent increments.

The Wealth Models were created in response to advisor demand, incorporate the latest research from the firm, and are available on Dimensional’s client website. Dimensional has provided asset allocation guidance to financial professionals for more than three decades through balanced strategies, target date income funds, and 529 college savings plans—all informed by industry-leading in-house research as well as academic research. The new Wealth Models were designed to address a wide range of wealth goals, ranging from aggressive wealth growth to preservation of capital and purchasing power.

Dimensional implements its core investment philosophy across all Wealth Models. The models reflect the firm’s belief that prices in global competitive capital markets incorporate the aggregate forward-looking expectations of market participants. Hence the models start from the global broadly diversified market portfolio and use information contained in market prices to systematically identify and emphasize securities with higher expected returns across equity and fixed income markets.

“The new Wealth Models reflect our belief system and our value-added approach to portfolio design and management—one that is holistic, consistent, and based on rigorous theoretical and empirical research,” said Savina Rizova, Global Head of Research. “We will update the allocations as needed in alignment with new research, new investment solutions, and changes in the investment opportunity set, while staying true to Dimensional Investing.”

Dimensional Core Wealth Models use Dimensional’s core equity strategies, which have a moderate focus on securities with higher expected returns. Dimensional Core Plus Wealth Models add component equity strategies and apply a stronger emphasis on securities with higher expected returns. Dimensional Tax-Sensitive Wealth Models seek to improve after-tax returns using various tax-advantaged strategies.

Dimensional Sustainability Wealth Models include funds that generally seek to reduce exposure to firms with less sustainable business practices and focus on key environmental considerations, such as greenhouse gas emissions and potential emissions from fossil fuel reserves.¹ Dimensional Social Wealth Models include funds that generally seek to reduce exposure to firms that are involved in controversial activities, such as nuclear weapons, tobacco, alcohol, and gambling. While Dimensional implements environmental, social, and governance considerations across all its portfolios, it has been managing dedicated funds to address sustainable and social issues for over 10 years and now has a suite of equity and fixed income funds to provide comprehensive asset allocations that address key sustainability and social issues.

“The models are designed to provide access to efficient asset allocation tools, so advisors can spend more time focusing on the broader wealth needs of their clients and growing their business,” said Bryce Skaff, Co-Head of Dimensional’s Global Client Group. “Dimensional Wealth Models offer a systematic and transparent solution, so financial professionals know what they are getting and why they are getting it.

The Wealth Models are not proposed as optimized solutions and are not tailored for specific individual investors. Professionals can apply them in their current form or customize to meet an array of individual needs and preferences.