Wes Crill, Senior Client Solutions Director and a Vice President at Dimensional Fund Advisors, joins Doug to break down the biggest myths around “volatility-proofing” portfolios. He explains that reducing volatility always comes with trade-offs — most often in expected return — and that many investors underestimate how much is already achievable with traditional tools like disciplined global diversification and mixing equities with fixed income. Crill also cautions that defined outcome ETFs, while popular, often replicate what standard asset-class combinations already do, but with higher costs.

He underscores the difference between systematic volatility (the compensated kind that comes from broad market exposure) and idiosyncratic volatility (uncompensated risk that diversification can eliminate). Crill notes that volatility itself is a healthy market function driven by changing information, and that long-term investors should focus less on daily movements and more on strategic positioning. The most resilient portfolios, he says, rely on broad diversification, cost-effectiveness, and rules-based discipline — not prediction or flavor-of-the-month volatility products.

Resources: Dimensional Fund Advisors

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