Key Concept 3

Manage Risks

We Believe

Risk can't be eliminated, but it can be managed – even potentially reduced – through our prudent approach:

  • We diversify globally (almost 50% of world stock market value is non-U.S.)
  • We invest in thousands of securities to reduce company-specific risk
  • We combine Asset Classes that respond differently to various market conditions
  • We invest in high-quality, short-term bonds to provide income and help smooth out dramatic ups and downs

How We Know

Investing only in only one country means unnecessary risk as well as missing a world of potential opportunities.

Own Great Companies around the World

Source: Dimensional. In US dollars. Market cap data is free-float adjusted from Bloomberg securities data. Many small nations not displayed. Totals may not equal 100% due to rounding. Past Performance is not indicative of future results. All investments involve risk. Foreign securities involve additional risks including foreign currency changes, taxes and different accounting and financial reporting methods. Countries represented by their respective MSCI IMI(net div.). Indexes are unmanaged baskets of securities in which investors cannot directly invest; they do not reflect the payment of advisory fees or other expenses associated with specific investments or the management of an actual portfolio.

These Asset Class returns show no reliable pattern. But a globally-diversified portfolio (the black line representing 65% stocks/35% bonds) offers potentially more consistent returns with less risk. Our portfolios have 9 asset classes representing up to 10,000 securities in 45 countries and 35 currencies.

Smart diversification can help you stay on track

Source: Morningstar Direct 2015. Index representation as follows: U.S. Large Cap (S&P 500 Index), U.S. Value Stocks (Russell 1000 Value Index), U.S. Small Company Stocks (Russell 2000 Index), U.S. Real Estate Market (Dow Jones U.S. Select REIT Index), International Developed Value (MSCI World Ex USA Value Index (net div.)), International Small (MSCI World Ex USA Small (net div.)), Emerging Markets (MSCI Emerging Markets Index (net div)), Global Bonds (Citi WGBI 1-5Yr Hdg USD), US Bonds (BofA ML Corp & Govt 1-3 Yr TR)., 25/75 Index Mix: 4% Cash, 35% ST US Fixed Income, 36% Global Bonds, 5% US Large, 5% US Value, 3% US Small, 7% Intl Large Value, 2% Intl Small, 3% US REITs; rebalanced annually. Indexes are unmanaged baskets of securities that are not available for direct investment by investors. Index performance does not reflect the expenses associated with the management of an actual portfolio. Treasury notes are guaranteed as to repayment of principal and interest by the U.S. government. Past performance is not a guarantee of future results. All investments involve risk, including loss of principal. Foreign securities involve additional risks, including foreign currency changes, political risks, foreign taxes, and different methods of accounting and financial reporting. Fixed income investments are subject to interest rate and credit risk. Emerging markets involve additional risks, including, but not limited to, currency fluctuation, political instability, foreign taxes, and different methods of accounting and financial reporting. Real estate securities funds are subject to changes in economic conditions, credit risk and interest rate fluctuations. All investments involve risk, including the loss of principal and cannot be guaranteed against loss by a bank, custodian, or any other financial institution.