1. Embrace Market Pricing
The market is an effective information-processing machine. Each day, the world equity markets process billions of dollars in trades between buyers and sellers—and the real-time information they bring helps set prices.
Pursuing a Better
Investment Experience
2. Don’t Try to Outguess the Market
The market’s pricing power works against fund managers who try to outperform through stock picking or market timing. As evidence, only 18% of US-domiciled equity funds and 15% of fixed income funds have survived and outperformed their benchmarks over the past 20 years.
3. Resist Chasing Past Performance
Some investors select funds based on their past returns. Yet, past performance offers little insight into a fund’s future returns. For example, most funds in the top quartile of previous five-year returns did not maintain a top-quartile ranking in the following five years.
4. Let Markets Work for You
The financial markets have rewarded long-term investors. People expect a positive return
on the capital they supply, and historically, the equity and bond markets have provided growth of wealth that has more than offset inflation.
5. Consider the Drivers of Returns
There is a wealth of academic research into what drives returns. Expected returns depend on current market prices and expected future cash flows. Investors can use this information to pursue higher expected returns in their portfolios.
6. Practice Smart Diversification
Holding securities across many market segments can help manage overall risk. But diversifying within your home market may not be enough. Global diversification can broaden your investment universe.
You never know which market segments will outperform from year to year. By holding a globally diversified portfolio, investors are well positioned to seek returns wherever they occur.
Many people struggle to separate their emotions from investing. Markets go up and down. Reacting to current market conditions may lead to making poor investment decisions.
9. Look Beyond the Headlines
Daily market news and commentary can challenge
your investment discipline.
Some messages stir anxiety about the future, while others tempt you to chase
the latest investment fad.
When headlines unsettle you, consider the source and maintain a long‑term perspective.
10. Focus on What You Can Control
A financial advisor can offer expertise and guidance to help you focus on actions that add value. This can lead to a better investment experience.
There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
In USD. CRSP 6–10 Index represents US small cap. S&P 500 index represents US large cap. IA SBBI US LT Govt TR USD represents US long-term government bonds. IA SBBI US 30 Day TBill TR USD represents US Treasury bills. Changes in the US Consumer Price Index are used to measure US inflation. See bottom of page for index descriptions.
The prices of small cap stocks are generally more volatile than large cap stocks.
Government bonds and Treasury bills are guaranteed by the US government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value.
Number of holdings and countries for the s&P 500 index and msci acwi imi (all country world imi index) as of December 31, 2023. s&P data © 2024 S&P dow jones indices llc, a division of s&P global. all rights reserved. msci data © msci 2024, all rights reserved.
In USD. source: dimensional, using data from the bloomberg LP. includes a primary and secondary exchange trading volume golbally for equities. daily averages were computed by calculating the trading volume of each stock daily as the closing price multiplied by shares traded that day. all such trading volume is summed up and divided by 252 as an approximate number of annual trading days.
Index Data Sources: Index data provided by Bloomberg, MSCI, Russell, FTSE Fixed Income LLC, and S&P Dow Jones Indices LLC. Bloomberg data provided by Bloomberg. MSCI data © MSCI 2025, all rights reserved. Frank Russell Company is the source and owner of the trademarks, service marks, and copyrights related to the Russell Indexes. FTSE fixed income indices © 2025 FTSE Fixed Income LLC. All rights reserved. S&P data © 2025 S&P Dow Jones Indices LLC, a division of S&P Global. All rights reserved.
Index Data Sources: Index data provided by Bloomberg, MSCI, Russell, FTSE Fixed Income LLC, and S&P Dow Jones Indices LLC. Bloomberg data provided by Bloomberg. MSCI data ©MSCI 2024, all rights reserved. Frank Russell Company is the source and owner of the trademarks, service marks, and copyrights related to the Russell Indexes. FTSE fixed income indices © 2024 FTSE Fixed Income LLC. All rights reserved. S&P data © 2024 S&P Dow Jones Indices LLC, a division of S&P Global. All rights reserved.
in usd. chart is for illustrative purposes only. us large cap is the s&P 500 index. us large cap value is the russell 1000 value index. us small cap is the russell 2000 index. us small cap value is the russell 2000 value index. us real estate is the dow jones us select reit index. international large cap value is the msci world ex usa value index (gross div.). international small cap value is the msci world ex usa small cap value index (gross div.). emerging markets is the msci emerging markets index (gross div.). Five-year us government fixed is the bloomberg us treasury bond index 1-5 years. s&p and dow jones data © 2024 s&p dow jones indices llc, a division of s&p global. all rights reserved. frank russell company is the source and owner of the trademarks, service marks, and copyrights related to the russell indexes. masci data © msci 2024, all rights reserved. bloomberg data provided by bloomberg.
Investing involves risk, including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
The S&P 500 is a stock market index tracking the stock performance of 500 of the largest companies listed on stock exchanges in the United States. Indexes are unmanaged and cannot be invested in directly.
The MSCI All Country World Index (ACWI) is a free float-adjusted market capitalization index that is designed to measure equity market performance in the global developed and emerging markets.
US-based active fund performace, 2005-2024
percentage of top-ranked funds that stayed on top
growth of a dollar, 1926-2023 (compounded monthly)
the drivers of outperformance
