For investors who seek commodity exposure greater than what is available in a diversified portfolio, Dimensional manages a strategy designed to offer disciplined and efficient access to commodity performance, with the potential to earn returns above the portfolio’s benchmark.
The DFA Commodity Strategy Portfolio pursues broad commodity exposure through index swaps and, to a lesser extent, through futures contracts, but does not attempt to closely track an index. The custom swaps are flexibly managed to avoid liquidity costs and price pressures that arise from index tracking in the commodity futures market. In addition, these swaps seek to improve the expected return and lower the volatility of the commodity strategy by dynamically shifting across the maturity spectrum.
The portfolio’s fixed income component holds short-term investment-grade bonds to pursue a higher expected return and to complement portfolio objectives. The portfolio employs variable credit and variable maturity approaches to manage credit and term exposure across the investment-grade spectrum.
Portfolio value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. Commodities include increased risks, such as political, economic, and currency instability, and may not be suitable for all investors. The Portfolio may be more volatile than a diversified fund because the Portfolio invests its assets in a smaller number of issuers and commodity sectors.
The Portfolios investment in commodity-linked derivative instruments may subject it to greater volatility than investments in traditional securities, particularly if the instruments involve leverage. There can be no assurance that the Portfolios use of leverage will be successful.
The use of derivatives for hedging or non-hedging purposes may be considered more speculative than other types of investments. Derivative securities are subject to a number of risks, including commodity, correlation, interest rate, liquidity, market, credit and management risks, and the risk of improper valuation. The Portfolios use of derivatives, particularly commodity-linked derivatives, involves risks different from, or possibly greater than, the risks associated with investing directly in securities and other traditional investments. Changes in the value of a derivative may not correlate perfectly with the underlying asset, rate, or index, and the Portfolio could lose more than the principal amount invested. Additional risks are associated with the use of credit default swaps, including counterparty and credit risk (the risk that the other party to a swap agreement will not fulfill its contractual obligations, whether because of bankruptcy or other default) and liquidity risk (the possible lack of a secondary market for the swap agreement).
The Fund will gain exposure to commodity markets primarily by investing up to 25% of its total assets in the Dimensional Cayman Commodity Fund I Ltd. (the Subsidiary), a wholly owned subsidiary of the Fund organized under the laws of the Cayman Islands. By investing in the Subsidiary, the Fund is indirectly exposed to the risks associated with the Subsidiarys investments. The derivatives and other investments held by the Subsidiary are generally similar to those that are permitted to be held by the Fund and are subject to the same risks that apply to similar investments if held directly by the Fund.
Dimensional Fund Advisors is an investment advisor registered with the Securities and Exchange Commission. Consider the investment objectives, risks, and charges and expenses of the Dimensional funds carefully before investing. For this and other information about the Dimensional funds, please read the prospectus carefully before investing. Prospectuses are available by calling Dimensional Fund Advisors collect at (512) 306-7400 or at this link.
Investing involves risks such as fluctuating value and possible loss of principal investment.
Mutual funds distributed by DFA Securities LLC