Dimensional Fund Advisors (DFA Funds)
In 1971, David Booth, while working with John “Mac” McQuown and William Fouse of Wells Fargo Bank established the first index fund, a concept that John Bogle would later use as a foundation on which to build The Vanguard Group, a retail mutual fund powerhouse renowned for low-cost index funds. The 1970s also saw the rise of the no-load fund. This new way of doing business had an enormous impact on the way mutual funds were sold and would make a major contribution to the industry’s success. David Booth, who was a student of Eugene Fama’s at the University of Chicago was working to develop Fama’s work that could build the first ever index fund that could “outperform itself”.
David Booth went on to create Dimensional Fund Advisors (DFA) in 1980 with Rex Sinquefeld, and John McQuown and create funds employing what became known as the Fama-French Three Factor Model. DFA is known for its innovative approach to investment management founded on the use of rigorous, cutting-edge academic research. The firm has nurtured relationships with some of the world’s leading scholars in finance and related fields since its earliest days. In fact, 2013 Nobel Prize Laureate and professor of finance at the University of Chicago, Eugene F. Fama, who is popularly known as the father of finance, is a founding shareholder of Dimensional Fund Advisors and remains a member of the board of directors as of 2016.
Research shows that 92% of active fund managers underperform their benchmarks. Index funds virtually eliminate this risk of underperformance. Dimensional Fund Advisors (DFA), however, has engineered an even better mutual fund. The tenets of DFA’s approach has resulted in a sizable return advantage over both active and index mutual funds. The firm’s investment process draws on the latest research by Fama and many other leading academics to inform its own research and testing. It then applies new findings and insights to the development of investment strategies and the improvement of its portfolio management and trading processes. Since it’s founding in 1981, Dimensional Fund Advisors has worked tirelessly to transform important research into practical solutions for its investment clients.
CJM Wealth Management is among the 1% of the nation’s 250,000 advisors using the Fama-French Investment Model; an elite group of Dimensional Fund Advisors (DFA) with access to DFA’s in-depth and ongoing financial science academic research and its funds. DFA funds have consistently surpassed their category benchmarks. CJM subscribes to the fundamentals of DFA. They hold that the markets are efficient and cannot be timed or beat. Time in the market is what matters – not trying to time the market.
By effectively capturing the best returns of any given asset class – small or large cap value, developing or emerging, U.S. or international – an investor benefits. By being opportunistic, but deliberate and disciplined in your market transactions, our clients benefit both in lower risks and costs. By staying the course of each client’s long-term goals and maintaining a portfolio which reflects those goals, wealth can be built and preserved.
Learn how, CJM Wealth, among the elite advisors with access to Dimensional Fund Advisors’ funds and research, delivers an elevated investment experience. Contact us at: 631.777.1030 or email: Diane@CJMWealth.com
“More than 75% of its (DFA) funds have beaten their category benchmarks over the past 15 years, and 80% over the past five years, according to Morningstar.”Barron's