Why We Choose DFA
Dimensional Fund Advisors Offers Greater Returns
Dimensional Fund Advisors (DFA) is an investment firm that provides very attractive
passively-managed mutual funds for use in the construction of investment portfolios.
Twenty seven (27) of 33 equity and fixed income funds offered by Dimensional in the
US were ahead of their benchmarks (after fees) for the 10-year period through
DFA takes a very scientific and academic approach to investing. Five of their seven
directors are professors at major universities. Two board members (Myron Scholes
and Robert Merton) are winners of the Nobel Prize in Economics. Nobel prize winner
Merton Miller was also a director before his death.
DFA employs their significant academic brain power to provide an array of passively-
managed mutual funds engineered to provide superior long-term reward to investors.
These funds are similar to index funds, but with some improvements.
DFAs procedures and trading systems exploit small inefficiencies that are present in
traditional index funds in order to provide superior offerings. For example, when a
security is added (or removed) from an index definition, index fund managers will add
(or remove) that security to their portfolio at the particular instant the index
composition changes. This behavior minimizes their tracking error to the index, but
at a cost to investors on average of approximately 1-2% per year for small-stock
DFA by contrast will employ patient trading and look for motivated buyers or sellers.
They act as a dealer where almost everything is for sale or purchase if the price is
right. On average, DFA clients benefit by exploiting inefficiencies in traditional index
DFA also provides mutual funds that are not well represented by traditional indexes.
For example, their emerging markets offerings tend to be more equally weighted than
index market capitalization would indicate. This tends to reduce market and political
risk. DFA also offers small and value foreign and emerging markets stock funds.
For more information on DFA you can visit their website at http://www.dfaus.com/
DFA seeks to keep their costs to a minimum by working only through approved
investment advisors including Bickford IMS. Unfortunately, their funds are not
available directly to the general public.
Bickford IMS receives no commissions or financial incentives from DFA or
any other investment product supplier. Our investment choices are based
only on the best interest of our clients.
Copyright © 2018, Joel D. Bickford. All Rights Reserved.