Comments on: Dimensional Fund Advisors Part II

By: Dimensional Fund Advisors Part XIII : WhereDoesAllMyMoneyGo.com

Dimensional Fund Advisors Part XIII : WhereDoesAllMyMoneyGo.com — Tue, 07 Oct 2008 02:00:42 +0000

[...] expected performance in the Three Factor world, alpha which appeared in a CAPM world may not exist. As I alluded to in Part II of this series, the Fidelity Magellan fund when helmed by Peter Lynch provided both CAPM alpha and Three Factor [...]

By: Dimensional Fund Advisors Part I : WhereDoesAllMyMoneyGo.com

Dimensional Fund Advisors Part I : WhereDoesAllMyMoneyGo.com — Thu, 21 Aug 2008 17:34:42 +0000

[...] CLICK HERE TO GO TO PART II Share and Enjoy: [...]

By: Preet

Preet — Wed, 13 Aug 2008 18:06:55 +0000

@ Jordan – an excellent question and yes I will address the differences between DFA Canada and DFA USA. Specifically I will also address why the funds have different performances than the indices and how to interpret that. Also, you are quite correct to compare the A class instead of the F class because either will have a 1.00% fee in the end that goes to the advisor – this 1.00% drag must be factored in when making a comparison to DIY ETF investors – some may find that the extra 1% is not worth it. What muddies the waters is that not all planners are created equal either, so what you get for the 1.00% can vary from advisor to advisor as well – this will also be addressed.

By: Jordan Clark

Jordan Clark — Wed, 13 Aug 2008 07:15:43 +0000

I’m very interested in reading this full series of articles, I’m already fully behind the leaps of faith on passive investing and I believe in the DFA fundamentals, but I just don’t know enough to jump on board.

For one thing, I didn’t realize DFA Canada had so few approved advisors, that definitely explains why I haven’t been able to find much information on their products from other blogs or online in general aside from DFACanada.com and IFACanada.com.

I hope that you will cover the difference of DFA in the US compared DFA Canada. In the US their long history shows a very successful product, but the Canadian fund is much newer and smaller. So I wonder if that is causing a drag on it’s performance because it doesn’t appear that many of their funds have beaten their respective indexes since inception (according to GlobeFund.com).

- DFA Canadian Core Equity A (3 Year Avg: 8.24% vs. 11.90% S&P/TSX)
- DFA International Core Equity A (3 Year Avg: 2.78% vs. 4.59% MSCI EAFE)
- DFA International Small Class A (3 Year Avg: 1.75% vs. 4.59% MSCI EAFE)
- DFA International Value Class A (3 Year Avg: 2.99% vs. 4.59% MSCI EAFE)
- DFA U.S. Core Equity A (3 Year Avg: -5.22% vs. -3.08% S&P 500)
- DFA U.S. Small Cap Class A (3 Year Avg: -5.73% vs. -3.02% Russell 2000)
- DFA U.S. Value Class A (3 Year Avg: -6.79% vs. -3.08% S&P 500)

By: Preet

Preet — Tue, 12 Aug 2008 23:51:50 +0000

@ Michael James – very true, and you hit the nail on the head by using the term “businesses” instead of stocks in that last sentence.

By: Michael James

Michael James — Tue, 12 Aug 2008 13:11:17 +0000

Hi Preet,

I’m looking forward to the rest of your DFA series. I agree with you that mispricings occur infrequently because of the competition to find them if we restrict our attention to mispricings that can be exploited over the short term. If I’m to believe Warren Buffett, opportunities to buy stock in businesses that have excellent long-term prospects come up all the time, particularly when the market in general is down. If Buffett were starting over with a few million dollars, I have little doubt that he could find a few small caps that would outperform over the next two decades or more.

If your focus is on next month, then the efficient market hypothesis is quite close to reality. If your focus is on the next decade, then there are mispricings everywhere for the investor willing to understand businesses and their prospects.