This is past weekend, a sweet lady who loves investments asked me to explain to her the Dimensional Funds, the fund family that we use most in building our client portfolios. Sometimes I wonder if my explanation properly explains why we choose them to investment in, when we have thousands of mutual funds, stocks, and exchange traded funds to choose from. Being an independent, fee-only advisory firm, we have no obligation to use any particular investment.
The primary reasons that we use Dimensional Fund Advisors, or DFA, are they provide cost-effective access to many asset classes all over the world, their smart trading strategies and the way they screen for which securities to purchase on any given day. They do not get caught up in the futile world of trying to predict what will happen next in the markets, but instead, purchase securities of companies that are healthy and thriving with the knowledge that healthy companies tend to stay that way. The geek in me also just thinks they are cool. One of their guiding principles, and the basis of their beginning, is that they “base investment strategies on a scientific methodology.” That is not just a phrase. They have leading finance academics involved in their company, and have been since their inception. Since I spent a few years studying the research of those academics, they are like rock starts to me, and it is exciting to be able to see our clients benefit from that research.
I recently visited their headquarters for a conference. I was struck by the fact that they posted their “Guiding Principles” on the wall, as a constant reminder to employees and the advisors that visit them of who they are, and who they strive to remain to be. The photo above is the picture I took of that wall.