Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
Support MFO
Donate through PayPal
How Dimensional Fund Advisors Really Earn Better Returns
FYI: Dimensional Fund Advisors is as popular as hemp in a commune of hippies. According to Investment News, a 2014 survey said DFA’s investors were more loyal than investors with any other firm.
One reason is that the mutual fund company has posted strong performances. Bloomberg reports that nearly 90 percent of DFA funds with a 15-year track record beat their benchmarks. AssetBuilder regularly updates a series of DFA fund returns. They compare them to Vanguard’s funds. Their results often humble those of the indexing giant Regards, Ted http://assetbuilder.com/andrew_hallam/how_dimensional_fund_advisors_really_earn_better_returns
In a NUTSHELL: For some asset classes, such as large US Stocks, DFA doesn’t seem to make much of a difference. DFA’s large company fund (DFUSX) is very similar to Vanguard’s 500 fund (VFIAX), although it charges a slightly higher expense ratio (10 basis points vs 5 for the Vanguard fund). The performance difference? According to Morningstar, DFUSX has had an average annual return (arithmetic) of 7.96% per year for the last ten years, compared to 7.94% per year for the Vanguard fund. Am I going to pay 0.37%, much less 1% to get DFA access to that fund? No way. For other asset classes, however, the difference is larger.
Thanks for that link. I had been thinking about the fee difference between using Vanguard funds and DFA funds. This provides some perspective about that.
I have a 529 account in Utah (with Vanguard index funds) and one in West Virginia (using DFA funds) and it is interesting to compare. Over the past 4 years, the Utah plan has outperformed, but again its not apples to apples. FWIW
Comments
http://whitecoatinvestor.com/dfa-vs-vanguard/
Dave
For some asset classes, such as large US Stocks, DFA doesn’t seem to make much of a difference. DFA’s large company fund (DFUSX) is very similar to Vanguard’s 500 fund (VFIAX), although it charges a slightly higher expense ratio (10 basis points vs 5 for the Vanguard fund). The performance difference? According to Morningstar, DFUSX has had an average annual return (arithmetic) of 7.96% per year for the last ten years, compared to 7.94% per year for the Vanguard fund. Am I going to pay 0.37%, much less 1% to get DFA access to that fund? No way. For other asset classes, however, the difference is larger.
"Here is a another point of view regarding DFA vs. Vanguard
http://whitecoatinvestor.com/dfa-vs-vanguard/
Dave"
Thanks for that link. I had been thinking about the fee difference between using Vanguard funds and DFA funds. This provides some perspective about that.