Economists Eugene Fama and Ken French developed the three factor namesake model which predicted that portfolios tilted toward small cap and value over growth would result in higher long-term returns. Perhaps that’s why nearly every other index construction tends to outperform market capitalization weighted returns.
One way to harness the potential of small-cap tilting is to put clients into funds from the Dimensional Fund Advisors (DFA) family of funds -- with which both Fama and French are affiliated. Their low-cost value, small-cap and small-cap value funds have bested the overall market. Consumers can only get access to these funds through advisors.
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