Our clients benefit from access to an exclusive class of low-cost, institutional mutual funds offered by Dimensional Fund Advisors, or DFA. These funds are based upon extensive research into what drives market returns over time, including the work of Eugene Fama, recipient of the 2013 Nobel Prize in Economics. DFA limits access to its funds to a select group of fee-only financial advisory firms who understand the benefits of their structured approach to investing. Avier Wealth Advisors is one of those firms. We have chosen to utilize DFA funds because we share this academic, data-driven investment philosophy.
The Dimensional approach focuses on academic research that isolates the factors that tend to outperform the broad market over long time periods and the risk characteristics that can be eliminated from a portfolio. While indexes are simply measures of an asset class, DFA funds aim to efficiently capture the excess returns of an asset class without taking uncompensated risk—and at a low cost.
As an example, value stocks have outperformed growth stocks over time. The same can be said for small cap stocks compared to large cap stocks. Company profitability is another “dimension” that exhibits potentially higher returns. DFA funds allow us to act as portfolio engineers, strategically tilting our portfolios to efficiently capture these effects in both the domestic and international markets.
DFA launched its first strategy in 1981 based on research documenting the stronger performance of US small cap stocks. Since then, DFA has continued to create low-cost funds that are based upon sound research by leading academics. As of December 31, 2014, Dimensional manages over $380 billion for institutions and clients of approved financial advisors.