Holdings are subject to change.
Dimensional Investing
in Action
C A SE S T U DY 1: EQ U I T IE S
Why Flexibility Matters in Rebalancing
Stock prices are changing every day. Yet indices only revisit their holdings
periodically—sometimes just once a year. This can lead to style drift away from
the intended exposure, as well as forced buying and selling on rebalancing dates
that result in higher transaction costs. Dimensional's approach can overcome
these drawbacks with daily flexibility.
Index vs.
Dimensional
Approach
I N D E X
A P P R O A C H E S
D I M E N S I O N A L' S
F L E X I B L E
A P P R O A C H
E X P O S U R E C A S H F L O W S R E B A L A N C I N G C O S T S
May face style
drift between
rebalance dates
Provides more
consistent focus
through time
Maintain portfolio to
limit tracking error
Rebalances portfolio
toward higher
expected returns
Force trading that
leads to higher costs
Allows flexibility
across names and
timing to reduce costs
FOR PROFESSIONAL USE ONLY. NOT FOR USE WITH RETAIL INVESTORS.
Size and
Relative Price
Characteristics
Russell 2000 Value
Index Holdings
Smaller
Larger
Value Growth Value Growth
Holdings after 2020 Rebalancing
11 months later
Style Drift before 2021 Rebalancing
