Understanding Fixed Income Risk Premiums: Perspectives from Dimensional Fund Advisors (DFA)

In this episode, Tom Goodrum, Institutional Fixed Income Strategist at DFA, will share with us the firm’s perspective on the importance of understanding the key risks that drive fixed income.  Many investors are familiar with the Fama-French risk premium framework that explains the majority of expected returns within global equities, but fewer are familiar with how this same risk-based framework applies to fixed income investing.  Tom and I discuss how term premiums across government and credit yield curves can explain the bulk of expected returns in fixed income as well as DFA’s views on the state of trading fixed income and why DFA hedges its currency risk across most of their global fixed income strategies.