Dimensional’s Gerard O’Reilly on the Shift Back to Public Markets

After years of directing time, attention, and capital toward private markets, institutional investors are taking a fresh look at whether they underinvested — intellectually and operationally  — in public markets.
Gerard O’Reilly, co-CEO of Dimensional Fund Advisors, said many large investors are reassessing their approach after treating public markets largely as a low-cost, passive allocation. With volatility and concentration in major benchmarks rising — and more scrutiny on how portfolios are actually implemented — some are asking whether they left returns on the table.
That reassessment is less about shifting from passive to active, and more about how “passive” is executed in practice.
Dimensional, which is built around the idea that markets are broadly efficient, does not try to outguess them in a traditional sense. But unlike rigid index-tracking approaches, it allows for more flexibility in how portfolios are constructed and traded.
O’Reilly pointed to index rebalancing as one example, where funds tracking an index may be forced to buy stocks after prices have risen and sell after they have fallen. “Those are mechanical trades,” he said. “You’re not necessarily getting the best price — you’re just following the rule.”
“You don’t need to add more uncertainty than markets already give you,” O’Reilly said. “The question is whether you can improve outcomes without sacrificing discipline.”
For institutions coming back to public markets, that may be less about picking winners — and more about how those portfolios are actually built and traded.