Posted on Friday, March 11th, 2011
Dimensional Fund Advisors (DFA) is an important part of our clients’ investment strategy. There are three recent news items about DFA that you may have some interest in. The first is from Barron’s which named DFA as the best fund family for 2010 and #1 for equity funds. While that’s nice, we are always suspect about manager rankings, even when DFA is at the top. One year is not meaningful, and it will be different next year.
What’s more interesting are two articles in which DFA is not even mentioned. We use DFA, not for just what they do, but also for what they DON’T do. In two WSJ articles (A Place for Ultrashort? and Why Small Cap Funds Are Lagging) we can appreciate DFA for not deviating from their stated fund objectives. The articles tell the too often told story of funds that don’t do what they say they do – short-term bond funds that stretch for yield and lose money when they’re supposed to be safe havens, and small cap funds that aren’t so small-cap, and miss the best small cap market in years in 2010. In both cases, DFA’s funds had outstanding results because it remained true to its objectives.
Thankfully, DFA stays disciplined in its approach and doesn’t do what many other managers do – chase investment returns from investments outside their funds’ stated asset class. Because of DFA’s focus, we’re confident that our clients’ asset allocations will produce the desired results in time.
To learn more about why we use DFA funds, you can click here.