Dimensional Fund Advisors

Dimensional Fund Advisors (DFA) is headquartered in Santa Monica, California. They are a traditional mutual fund company like Fidelity, Janus, and T. Rowe Price. You may not have heard of them since they are generally not available to the public (except through certain 401(k) plans) and because they do not advertise.

DFA funds are only available to institutional clients (pensions, etc.) and through select Fee-Only advisors. Blue Water is one of a handful of advisors in Southern California to be approved to offer clients access to DFA funds.

DFA's leaders and Board members read like a Who's Who list of top academics and researchers. Many are top professors at prestigious business schools like the University of Chicago, Harvard, Stanford, and Wharton. Some have won Nobel Prizes for their work in Finance and Economics. DFA is an academic powerhouse. They use their research, expertise, and experience to build the finest asset class mutual funds available.

DFA funds are no-load (commission-free), low cost, very diversified, and tax-efficient. They provide a much broader and deeper coverage of the global markets than other mutual funds. They cover individual asset classes in the same fashion.


Example:

DFA's International Small Company Portfolio (foreign small-cap stocks) holds over 4,500 stocks while most companies don't even offer such a fund. Vanguard's International Explorer and Fidelity's International Small-Cap only hold 205 and 382 stocks respectively. Both are closed to new investors. (Data as of 12/31/07)
 

Example:

DFA has three funds that cover Emerging Markets. One focuses on the traditional large-cap stocks. The other two focus on value and small-cap stocks within emerging markets. We don't know of any other fund company that offers that.
 

Example:

DFA's Large Value, Small-Cap Value, and International Value funds provide deeper value coverage (their value is considered more value) than most other value funds in those asset classes. This means that these DFA funds are exposed to a greater "value effect".
 

Example:

DFA's domestic and international small-cap funds provide deeper small-cap coverage (their small-caps are smaller) than most other funds. This means that these DFA funds are exposed to a greater "small effect".

Through our custodian, TD Ameritrade, we can buy virtually any stock, bond, or mutual fund available. However, most of the time we recommend our clients to use DFA funds in the construction of their portfolios. We are not paid any money for recommending DFA funds. We simple feel that they are the best funds to use for implementation of most asset classes. We primarily use DFA on the stock side. After all, that is their specialty. On the bond side, we usually recommend a combination of DFA and other low-cost funds.

We hope this offers a little insight into why and how we use DFA funds. They are a very unique company, and they are highly respected in our industry and by the media. For more information, please contact us or visit their website.

Below is the latest quarterly performance for DFA funds. Funds typically used in the Total Portfolio Program are highlighted in yellow.  Funds used in our Core Program are highlighted in green.

View DFA’s fund performance

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