Small Cap Equities
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US Small Cap Strategy DFA US Small Cap Fund Class A DFA US Small Cap Fund Class F |
International Small Cap Strategy DFA International Small Cap Fund Class A DFA International Small Cap Fund Class F |
The mutual funds managed by Dimensional Canada are available only to Canadian residents, through representatives authorized by us and affiliated with approved registered dealers.
The general investment approach and strategies we use to manage our small cap equity funds are described below. Specific information about the individual funds discussed can be found in the prospectus.
Dimensional Canada's parent company, Dimensional Fund Advisors, has been a pioneer in small stock investing since 1981. Research documents that small companies have provided higher expected returns than large companies in the long term. Dimensional's objective is to deliver the size premium and provide the diversification benefits of investing in small companies worldwide. We believe the best way to accomplish this is to invest in a broadly diversified cross section of small companies in major international markets.
Individual small companies worldwide are thinly traded, so careful execution is essential to portfolio performance. Dimensional is able to trade twenty-four hours a day through its offices in Santa Monica, Austin, London, and Sydney. By making contact with local brokers in the markets where we invest, Dimensional ensures awareness of local market details and trading idiosyncrasies, thereby minimizing transaction costs.
US Small Cap
Currently, the DFA US Small Cap Fund generally purchases US operating companies with market capitalizations below the market cap of the 1,000th largest US operating company.
We also employ additional screening criteria. These criteria may eliminate REITs, closed-end investment companies, limited partnerships, companies in bankruptcy, ADRs, over-the-counter stocks with fewer than four market makers, and other securities. New cash flow is monitored so portfolios may remain fully invested. On a regular basis, we examine the market capitalization of eligible stocks to determine which issues are eligible for purchase and which are sale candidates. We use a hold or buffer range for companies that grow larger than the defined size breakpoint, in order to minimize transaction costs and keep portfolio turnover low.
International Small Cap
To define the eligible buy list of stocks for the International Small Cap Fund, Dimensional first ranks the firms in each country or region by market cap and identifies those companies that fall within the defined size range. Dimensional's methodology to define small cap stocks allows flexibility to adjust the size break with market fluctuations in order to avoid size drift while minimizing turnover. As a result, Dimensional Canada's international small cap funds will typically have a lower average market cap than that of competitors' funds or of benchmarks.
Dimensional trades international small company stocks through its US, London, and Sydney offices. Where possible, the firm leverages its expertise in trading US small cap stocks, adopting a similar patient and careful style of trading.
Tax Management
Where practical, Dimensional Canada seeks to maximize the after-tax value of an investment by managing the Funds in a manner that aims to defer the realization of net capital gains where possible.