Issue link: https://info.seic.com/i/1495707
Past performance is no guarantee of future results. Actual returns may be lower. See Index Descriptions for more information. FOR PROFESSIONAL USE ONLY. NOT FOR USE WITH RETAIL INVESTORS. The Drivers of Higher Expected Returns At Dimensional, we don't try to outguess the market. We're committed to understanding it. We use leading academic research to identify reliable drivers of higher expected returns across equity and fixed income markets. Equity Equity drivers are pursued through systematic, consistent exposure. Annualized compound returns (%) Small cap outperforms large cap. 1928–2022 Value outperforms growth. 1928–2022 High profitability outperforms low profitability. 1964–2022 Relative Price Profitability Size Dimensional US Small Cap Index Fama/French US Value Research Index Fama/French US High Profitability Index S&P 500 Index Fama/French US Growth Research Index Fama/French US Low Profitability Index 11.84 9.85 12.52 9.28 11.51 7.72 Fixed Income Fixed income drivers are pursued through systematic, dynamic exposure. Credit Currency Term Wider term spreads generally lead to larger term premiums. US Intermediate Government minus US 1–3 Year Government, Average Monthly Return Difference (1976 –2022 ) 5 Wider credit spreads generally lead to larger credit premiums. US Intermediate Credit minus US Intermediate Government, Average Monthly Return Difference (1973–2022) 5 Global bonds issued in different currencies offer opportunities for higher expected returns and reduced volatility. Currency-Hedged Expected Return 5 All Spreads All Spreads Spreads >25 bps Spreads >75 bps Spreads >50 bps Spreads >125 bps Years Years 0 15 30 Global Currency B A B C D Local Currency Higher 0.07% 0.05% 0.07% 0.15% 0.26% 0.12%