Mutual Funds from Dimensional Fund Advisors
Dimensional has several different types of mutual funds, which invest in domestic and foreign stock as well as fixed-income assets like federal and municipal bonds. The firm does not allow you to buy its mutual funds directly. Instead, you must go through a select group of fee-only advisors. You may also be able to access Dimensional funds through your employer's 401(k) plan.
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Greg Jones said 3 months ago
I am also an approved advisor for DFA. I can see the logic in requiring advisors use mostly their funds. They only want advisors that will "drink the koolaid" and use passive investments to create asset allocation strategies for their clients. They don't want advisors who try to time the market as this drives up the cost of holding the funds for those not in a timing strategy. I have heard many presentations trying to prove active management is superior to passive management but have yet to be convinced that active managers can ever win in the long term. The odds are just stacked against active management when you consider all of the additional costs that entails. DFA isn't strictly a passive manager as they do use some screens to build their funds.
Mark Hebner said 6 months ago
Morris, I am a DFA approved advisor and DFA does not provide marketing support for their advisors. What was your basis for that comment. Charles is correct, they are the best funds for prudent investing. Independent advisors choose their funds for many reasons. One has to do with a "non-forecasting" strategy used in all of their products. They are one of the few companies who take this stance. This study from Morningstar best explains why DFA has decided to pair their funds with an advisor:
http://www.ifa.com/12steps/step/step1page2.asp#t13
Last edited 6 months ago by Mark Hebner
Mark Hebner replied 6 months ago
I see the advisor site as educational material and listing of advisors as a benefit to the consumer. In my opinion, marketing support is more akin to financial support or sponsorship of advertisements, seminars or conferences, like many other mutual fund companies provide.
I prefer to think of passive management as a irrefutable conclusion of peer reviewed research and leave the word "belief" for those who think that someone can see the future, better than the combined opinion of millions of traders.
For anyone subject to the Uniform Prudent Investor Act (UPIA) it is hard to beat Dimensional Fund Advisors offerings.
There are two kinds of diversification referred to in the UPIA and comments - the diversification of multiple non-correlated asset classes and diversification to eliminate non-systematic risk. DFA offers highly defined asset class funds. They also offer core funds to eliminate non-systematic risk.
A careful study of the UPIA will show that proper use of DFA funds is about a close to a "safe harbor" as one can get if you are subject to the UPIA. With DFA Core funds, one can construct a globally diversified equity portfolio with only 3 funds and the portfolio will contain between 10,000 and 12,000 stocks.
The UPIA applies specifically to all Trust owned assets but is also applied by many judicial authorities to any situation in which a fiduciary capacity is involved.
tcanning said about a year ago
Despite having to pay a fee for the advisors, it is well worth it to pay a little up front to know exactly where your money is being invested, especially during these times. All of the fund advisers where extremely knowledgeable and made me feel very comfortable that my savings would rest in their direction.
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Robert A replied 6 months ago
Mark, while I totally agree with your perspective of DFA (I'm an approved advisor, too), I have to disagree with your claim that they don't provide marketing support. As you know, both the secure site and the public site provide numerous materials to help advisors communicate Dimensional products and ideas effectively. Many of which are posted on various advisors' own websites. I think its a great help to all of us.
As to Morris' assertion that that the days of University of Chicago are long gone, well, you either believe in passive management or your don't. I prefer the former.
Last edited 6 months ago by Robert A