Why DFA Funds?
Dimensional Fund Advisors (DFA) is one of the largest independently owned institutional investment management firms in the world. They were rated the #1 mutual fund family by Barron’s and Lipper this year and they have stringent principles and beliefs that set them apart from the rest. Here are the top 7 reasons you should be choosing Dimensional Funds.
1. They have a clearly defined approach. Their investment approach is rational, structured and simple to monitor. Their goal is to keep everything transparent.
2. Distinct Investment Strategies. Dimensional does not actively pick stocks or passively track commercial indexes but instead structures portfolios based on risk and returns as identified through financial science. Their main objective is to help clients structure globally diversified portfolios and to increase returns through state-of-the-art portfolio design and trading.
3. Scientific Research as basis for their Investment Philosophy. Research by Professors Eugene Fama and Kenneth French identified equity market exposure, capitalization, and price relative to fundamentals as the 3 factors that primarily determine the returns of a broadly diversified portfolio. Their work has held up through rigorous open review and Dimensional strategies focus on their insight.
4. Combination of Theory and Practice. By acting as a conduit between financial economists and practicing investors, Dimensional has pioneered many strategies and consulting technologies now taken for granted in the industry. This makes for an exchange of ideas that allows Dimensional to position themselves at the forefront of innovative solutions.
5. Focus on Investing with Virtually no Style Drift. Dimensional believes that, over time, a well-structured investment approach will add value with a higher reliability and confidence level that one based on instinct and prediction. They adhere strictly to their asset class definitions. Portfolio managers are allowed to buy only those stocks that meet the defined requirements, and they have no financial incentive to deviate from this practice.
6. Low Costs. Their investment management fees are positioned well below those of traditional active managers. Their buy-hold approach and trading strategies are designed to minimize costs. Careful trading can reduce or even reverse the costs borne by traditional managers. Because Dimensional focuses on capturing the systematic performance of broad market dimensions rather than the random fluctuations of individual securities, they can keep costs low.
7. Broad Line of Complementary Strategies to Meet Your Ever-Changing Needs. Dimensional funds will allow you to gain exposure to asset classes around the world. Their goal is to provide investors with global investment solutions. On top of that they have a unique approach to fixed income. Their approach seeks to maximize returns by using the information in the current yield curve to find the optimal maturity range instead of using interest rate forecasts or simple fixed maturity index schemes.
- A clearly defined approach
- Distinct Investment Strategies
- Scientific Research
- Combining Theory and Practice
- Focusing on Investing
- Low Costs
- Complementary Strategies
is what separates Dimensional Fund Advisors from the rest of the pack.