Why Dimensional Fund Advisors?
We are agnostic when it comes to investment selection. We believe that markets price assets efficiently and that higher cost solutions rarely equate to better performance. Dimensional Fund Advisors provides an approach that is consistent with those beliefs. The fact that they are based in Austin made the decision that much easier.
The DFA difference begins with their commitment to apply a scientific approach to investing based on the best available academic research. From its beginning in 1981, DFA has continued to collaborate with pioneers in finance science from the University of Chicago and other universities, including Nobel Laureates Merton Miller (1990), Myron Scholes (1997), and Gene Fama (2013). Working with some of the world’s leading financial economists, DFA has been able to bring the latest academic theories and research to practice. This includes a long list of innovations such as Fama’s market efficiency research and the Three-Factor Model of stock returns developed by Fama and Ken French of Dartmouth College. Over the years, they have translated financial research into real-world investment solutions.
Dimensional also applies a flexible and patient approach to trading that can result in lower average prices of securities within their funds. By not being constrained to a third party index or having urgency to trade, DFA puts themselves in a position to take advantage of those parties that need liquidity.
At ATX Portfolio Advisors™, we are convinced that this symbiotic relationship between investment strategies and academia offers the innovative building blocks we need when assembling our Accountable Portfolios.
What others are saying...
Jason Zweig FROM The Wall Street Journal ON October 20, 2016
Here’s how DFA invests: It designs its own indexes, often of small-capitalization stocks, then waits—for weeks, if necessary—until an eager seller is willing to unload shares at below the prevailing asking price in the market. Such tactics can minimize and in some cases even erase transaction costs, providing a small but meaningful boost to returns.
Alex Bryan from Morningstar on June 9, 2015
Dimensional Fund Advisors has forged a strong and distinctive culture that has served investors well. The firm’s low-cost structure and disciplined approach to investing, launching new strategies, and qualifying the financial advisors who use its funds help set it apart.
Beverly Goodman from Barron's on January 4, 2014
More than 75% of its funds have beaten their category benchmarks over the past 15 years, and 80% over five years, according to Morningstar -- remarkable for what some investors wrongly dismiss as index investing. Its process is simple and repeatable -- and yet no other firm has tried emulating it. When asked why, co-founder, chairman, and co-CEO David Booth, 67, draws a surprising analogy to Star Wars, and Luke Skywalker's inability to harness the power of the Force until his devotion was deep and unwavering. "We are believers down to our toes," Booth says.
The force, in this case, is the theory of efficient markets, first put forth by Fama in 1965. Dimensional's funds all operate on the same principles -- that it's hard to beat the market, and impossible to do it consistently, by stock-picking. There are, however, various factors that can be exploited to provide market-beating returns. That, along with sophisticated trading strategies, a keen eye toward tax-efficiency, and low expenses (the average DFA fund charges just 0.39%) has led to Dimensional's success.
But don't liken what DFA does to indexing, and definitely don't call it passive: "I recoil when people think that what we do is being passive, because it has nothing to do with being passive," Booth says. "We are trying to beat the market without forecasting in the usual sense."
ROBERT SCHMANSKY FROM FORBES ON DECEMBER 3, 2013
There is an amazing track record that the company has built that’s worth understanding and following. Though you may not work with an advisor who has access to the funds, they are still worth any serious investor’s time.
RON LIEBER FROM THE NEW YORK TIMES ON JANUARY 28, 2011
Despite Mr. Booth’s modesty, many of D.F.A.’s mutual funds have actually outperformed their closest equivalent market indexes over time.
Tom Petruno from The Los Angeles Times on December 30, 2005
That gives Dimensional more flexibility in how and when to buy or sell stocks. And with smaller shares in particular, deft trading can be crucial in getting the best prices, which can boost investors' returns.
Shawn Tully from Fortune on July 6, 1998
Unlike any other money management firm, DFA insists that each of its funds follow a strategy based on rigorous academic research. And for the past three decades that research has squarely challenged the industry's fundamental assumption--namely, that a stock picker, given enough smarts and enough research, can consistently beat the market. To the Uber-intellects at DFA, the genius stock picker is a myth. "I'd compare stock pickers to astrologers," says Fama. "But I don't want to bad-mouth the astrologers."
If you would like to learn more about DFA, visit their website at www.dfaus.com.