We are pleased to inform you that Professor Eugene Fama has been awarded the Nobel Prize in Economics this week.
Professor Fama’s groundbreaking work on asset pricing and markets inspired the founding of Dimensional Fund Advisors, and his ongoing contributions have guided the firm’s investment approach for more than three decades. Beginning in the 1960s, Professor Fama and several collaborators demonstrated that stock prices are extremely difficult to predict in the short run, and that new information is very quickly incorporated into prices. These findings not only had a profound impact on subsequent research but also changed market practice. The emergence of index funds in stock markets all over the world is a prominent example.
You will probably know that the majority of the funds in your portfolio are invested with Dimensional Fund Advisors and it is comforting to know that the research of one of the founders of the firm has been acknowledged in such a way. Indeed, Dimensional founder David Booth also sponsors the Business School at the University of Chicago, which has an incredible record in winning Nobel Prizes for Economics (28 of 74 winners, or 38%, either taught at or attended the University of Chicago). The research on the science of capital markets that the University of Chicago provides flows through to the theories and funds developed by Dimensional Fund Advisors.
We extend our congratulations to Professor Fama for this well-deserved recognition and thank him for his profound impact on Dimensional and investors worldwide.