Author Topic: Dimensional Fund Advisors  (Read 8486 times)

Freestyler

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Dimensional Fund Advisors
« on: January 08, 2014, 02:35:21 PM »
Iīve read about these a couple of times lately. Before trying to dig too deep I wondered whether anyone here has any experience with them or any idea at all of the odds of me being able to subscribe to them from either Spain or France...

I think you can only get them through a broker (financial planner or the like). Would the additional fees be worth it?

*"Minor" ;-) spelling mistake edited
« Last Edit: January 08, 2014, 03:04:32 PM by Freestyler »

grantmeaname

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Re: Dimensional Fund Advisors
« Reply #1 on: January 08, 2014, 06:25:12 PM »
No. They'd have to really outperform to make up for thousands of dollars a year in advisors fees. You'd probably do better with a DFA advisor than a non DFA advisor, but if you don't need an advisor you should probably just go with the lowest fee mutual funds or ETFs you can get through a discount brokerage.

Khan

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Re: Dimensional Fund Advisors
« Reply #2 on: January 09, 2014, 11:22:58 AM »
DFA outperforms vanguard, but not enough to warrant using a broker IMO.

If you need a broker in order to keep on the straight and narrow, and help you avoid doing bad things, then the best place you could be is DFA funds.

It's the best financial product a broker could possibly be selling to clients, and any broker offering DFA should actually be a pretty good person as far as brokers go.

dude

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Re: Dimensional Fund Advisors
« Reply #3 on: January 09, 2014, 02:23:34 PM »
Check out John Greaney's takedown of DFA on his retireearlyhomepage.com

Just scroll this index and look for the DFA-related posts by title:

http://www.retireearlyhomepage.com/chronidx.html

Freestyler

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Re: Dimensional Fund Advisors
« Reply #4 on: January 09, 2014, 04:45:20 PM »
Thanks to all for the responses.

Itīs not that I think that I need in any way an advisor, broker or the like to manage my already existing bogleheads-like portfolio. Itīs just that DFA funds, some of which seemly outperform "traditional" index funds trough some "non actively managed optimizations", are only sold to individuals through advisors, brokers or however you want to call them. I wondered (and still do) whether the additional fees may be offset by the (alleged and expected, that's the problem) outperformance.

Thanks for the link, dude, it's being truly helpful.

« Last Edit: January 09, 2014, 06:02:29 PM by Freestyler »

grantmeaname

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Re: Dimensional Fund Advisors
« Reply #5 on: January 09, 2014, 05:28:58 PM »
I wondered (and still do) whether the additional fees may be offset by the (alleged and expected, that's the problem) outperformance.
You're on the right track here. Nebulous someday maybe outperformance versus absolutely for certain higher fees?

Another Reader

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Re: Dimensional Fund Advisors
« Reply #6 on: January 09, 2014, 05:42:18 PM »
Consistent historical outperformance, not alleged.  If you have a lot of money and a low, fixed fee "advisor," these funds make sense.  For the small investor , they probably don't.

Freestyler

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Re: Dimensional Fund Advisors
« Reply #7 on: January 09, 2014, 05:56:24 PM »
I wondered (and still do) whether the additional fees may be offset by the (alleged and expected, that's the problem) outperformance.
You're on the right track here. Nebulous someday maybe outperformance versus absolutely for certain higher fees?
Consistent historical outperformance, not alleged.  If you have a lot of money and a low, fixed fee "advisor," these funds make sense.  For the small investor , they probably don't.

Right now, I agree with you both ;-).

The thing is knowing (past performance)-believing (future performance) DFA has a consistent competitive advantage (that itīll be able to keep) with its proprietary quantitative methods.

I wonīt probably have access to DFA funds anyway. Iīll keep searching though.

grantmeaname

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Re: Dimensional Fund Advisors
« Reply #8 on: January 09, 2014, 06:29:10 PM »
Consistent historical outperformance, not alleged.
You can't take outperformance to the bank and buy freakish quantities of almonds with it if you don't own the fund yet and it already happened.

Another Reader

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Re: Dimensional Fund Advisors
« Reply #9 on: January 09, 2014, 07:15:04 PM »
No, but I can take the enhanced performance increment from the next ten years and buy a boatload of pecans from Costco.

grantmeaname

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Re: Dimensional Fund Advisors
« Reply #10 on: January 09, 2014, 07:36:18 PM »
If it happens. The best predictor of performance is low fees, though, and not morningstar stars or the trendy investing buzzword of the month.

kyleaaa

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Re: Dimensional Fund Advisors
« Reply #11 on: January 10, 2014, 11:07:08 AM »
DFA funds are great but they don't add nearly enough value to overcome the cost of an advisor. If you are going to invest through an advisor anyway, DFA is an excellent choice. But don't pay an advisor JUST to gain access to DFA.

As for being available to European investors, I have no idea. I would suspect not easily if they are at all.

Freestyler

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Re: Dimensional Fund Advisors
« Reply #12 on: January 11, 2014, 04:54:41 PM »
Thanks, kyleaaa. That's what I thought also.

I contacted DFA anyway. They are going to send me the contacts of some advisors. I may contact them if only to have a feel of how it works and how high the fees are, for informative purposes mainly.

prestojx

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Re: Dimensional Fund Advisors
« Reply #13 on: January 11, 2014, 05:22:17 PM »
DFA funds are great but they don't add nearly enough value to overcome the cost of an advisor. If you are going to invest through an advisor anyway, DFA is an excellent choice. But don't pay an advisor JUST to gain access to DFA.

As for being available to European investors, I have no idea. I would suspect not easily if they are at all.

I agree - especially with a portfolio of less than $1mm.
But, I can recommend Portfolio Solutions without reservation if you decide to use an advisor. I have used them for over 10 years and have been very happy with their service and relatively low fee structure.

kyleaaa

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Re: Dimensional Fund Advisors
« Reply #14 on: January 12, 2014, 08:57:37 AM »
DFA funds are great but they don't add nearly enough value to overcome the cost of an advisor. If you are going to invest through an advisor anyway, DFA is an excellent choice. But don't pay an advisor JUST to gain access to DFA.

As for being available to European investors, I have no idea. I would suspect not easily if they are at all.

I agree - especially with a portfolio of less than $1mm.
But, I can recommend Portfolio Solutions without reservation if you decide to use an advisor. I have used them for over 10 years and have been very happy with their service and relatively low fee structure.

Agree. I've met Rick Ferri a couple of times at conferences and he's on top of his game. He also posts on the bogleheads forum somewhat regularly so you could interact with him there if you wanted.

IntegrityIA

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Re: Dimensional Fund Advisors
« Reply #15 on: January 16, 2014, 10:38:27 AM »
Here are some additional information and resources for the MMM forum.  I am a huge fan of MMM.  I have invested with both DFA and Vanguard for many years and I am an approved DFA advisor.

1) Don't be "penny wise and pound foolish" when managing your money.  Expenses play a HUGE role but so does strategy.  Even if you don't use DFA, you can learn a lot from their strategy and academic research of the markets.  97% of the return of your portfolio is determined by "factor investing".  The 4 components of factor investing for stocks are market factor (beta), value factor, small cap factor and profitability factor.  You can find out more about factor investing and Why Dimensional (DFA) vs. Vanguard - [Mod Edit: Potential Spam Link Removed.]
2) Many investors need a coach/advisor.  Look at the data.  Typical retail investors make very poor decisions.  Just because you have low fees, it doesn't make up for poor decisions.  A coach can help with goals, strategy, portfolio design, execution, the courage to define reality, education and help you avoid big mistakes.  If you don't love investing, have time to learn and have extreme discipline..... it may make sense to hire a low cost, fee only fiduciary DFA advisor.  Here are some things you should look for - [Mod Edit: Potential Spam Link Removed.]
3) Active management typically doesn't work and most investors need a fiduciary on their side.  Shocking PBS video about the big banks:  Why You Need a Fiduciary! [Mod Edit: Potential Spam Link Removed.]
4) Here are a couple more recent third party articles about DFA. 
http://online.barrons.com/article/SB50001424053111904742804579284652021894432.html
http://online.barrons.com/article/SB50001424052748704329604578636040239374904.html
http://money.cnn.com/2014/01/13/investing/stock-picking-david-booth.moneymag/
http://www.advisor.ca/investments/market-insights/the-evolution-of-asset-pricing-129025

Good luck to all.  The science of investing will not only help you retire early but help you stay retired for 30 to 50 years.
All the best,
Todd Moerman

« Last Edit: January 16, 2014, 10:06:59 PM by IntegrityIA »

grantmeaname

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Re: Dimensional Fund Advisors
« Reply #16 on: January 16, 2014, 11:04:59 AM »
There's something in the water.