DFA is a fine company. However, some of the info you have about vanguard funds here is just flat wrong.

1. DFA has 3 types of international indexes - International Value, International Small Company and International Small Value. Vanguard has only one comparable international index fund - Developed Markets Index (VDMIX).

Vanguard has the following international index funds:
1. VDMIX: Developed market index. This does not have emerging markets
2. VEIEX: This is only emerging markets
3. VGTSX: Total international, this used to be a fund of the European, Pacific and emerging markets until this year when it was changed to holding individual stocks. It holds around 21% emerging markets now. This allows use of the foreign tax credit in taxable accounts. Search the irs.gov website if you have no clue what I am talking about here.
4. VEURX/VPACX: Developed Europe and Pacific indexes separated out. This is a legacy really from the old next
5. VFWIX: Another total world fund. The main difference here is a slightly higher expense ratio and the index it follows allows Canada while VGTSX holds no Canada. There are other subtle differences as well.
6. VFSVX: Added just this year I admit, but this is a non USA Small cap index fund.


2. DFA has 3 types of emerging markets indexes - Emerging Markets, Emerging Market Value and Emerging Markets Small Cap. Vanguard has only one comparable emerging market index fund - Emerging Markets Index (VEIEX).

Vanguard has no small cap international indexes, and no emerging market value and emerging market small cap index funds

So Vanguard just added a small cap international. However, you are correct in there being no small cap international value or small cap emerging markets. They also do not have a Peru ETF. These are fairly exotic and possible expensive investment options despite there past returns there is no guarantee of future earnings.

tripleB said:DFA uses active management in many of their proprietary funds. The fund managers pick stuff. Your advisor would then actively pick the DFA funds for you. Now you have two assholes actively managing and both have to be right to beat the market.

No, DFA doesn't use active management, and the DFA advisers simply rebalance the asset allocations.

Why is it that everything that comes out of your keyboard is either half-baked or flat out wrong? Why do you insist on polluting the world with your nonsense?

from : http://www.dfaus.com/library/faqs/

"Dimensional does not 'pick stocks,' so how do you decide which stocks to buy?

Buying stocks for the funds is a detailed process but can be described in general terms. We create an eligible universe of all traded stocks of real operating companies. We then apply filters to exclude stocks that do not fit the asset class of the fund or that have specific pricing or trading concerns. The remaining stocks are eligible for purchase and are subject to rough market-capitalization target weights. We regularly monitor trading in the market place with real-time checks for current news that may impact prices, such as a looming takeover. Other than that, we're generally indifferent among the stocks in the eligible universe, which allows us to trade opportunistically and take advantage of liquidity premiums that benefit client returns. For additional information regarding the investment strategies of each fund, please read each fund's prospectus and statement of additional information carefully.

from: http://www.dfaus.com/strategies/us/

The DFA core funds "seek to buy the total US market in proportions that provide higher exposure to the risk premiums associated with size and value identified by Fama and French. The total market is defined as the aggregate capitalization of the NYSE, AMEX, and NASDAQ Global Market System companies. The total market is weighted by market capitalization (price times shares outstanding), causing large cap growth companies to dominate. The applied core equity strategies alter the weighting of stocks by considering both a company's market cap and its book-to-market (BtM) ratio. As a result, exposure to the riskier small and value shares that research shows offer higher expected return is increased. To balance out the greater small and value exposure and still include every stock in the market, the weight of large cap and growth stocks is reduced."

"Dimensional's value strategies are based on the Fama/French research and are designed to capture the return premiums associated with high book-to-market (BtM) ratios. Our value portfolios are constructed by first ranking the total market universe by market cap and identifying those companies that fall within the defined size range. This universe is then ranked by BtM ratio.

"The US Small Cap Value Portfolio generally buys companies whose market cap falls within the smallest 8% of the total market universe, with a hold or buffer range up to the bottom 10% of the universe or below the 1,000th largest company in the universe, whichever results in a higher market capitalization break. The US Targeted Value Portfolio invests in companies whose size range includes companies smaller than the 500th largest company in the total market universe. The US Large Cap Value Portfolio invests in companies that have a market cap in the largest 90% of the total market universe or are larger than the 1,000th largest company in the universe, whichever results in a higher market capitalization break. A hold or buffer range for sales is also maintained for book-to-market percentiles. Issues that migrate outside the hold ranges are eligible for sale, with any proceeds reinvested in the portfolio."

from: http://www.altruistfa.com/dfa.htm

"DFA's funds are passively managed. Their mutual funds are engineered to follow guidelines which have been shown to result in improved long-term performance. They don't try to "pick stocks" which will do better than others. Instead they design their funds in order to expose investors to key risk factors (which have been shown to be associated with higher long-term performance). Stocks are picked in a mechanical fashion in order to meet the pre-ordained risk factor goals of each fund."

DFA funds, especially their specialty international small and/or value ones, are some of the only passive mutual funds in their sectors and they are quite reasonable in terms of their fees (much better than actively managed funds, better than Vanguard outside the US mostly although worse within the US). Of course you have to figure in the advisor fees when comparing DFA, although there are fixed-fee advisors you can get who will sell you DFA portfolios too -

comparison with Vanguard: http://www.altruistfa.com/dfavanguard.htm
fixed fee DFA advisors: http://www.retireearlyhomepage.com/dfaadv.html

Or if you don't want to pay up for an advisor you don't want, you can do like I did and try to get your 401k plan to include the better DFA funds as investment options . I would say their EM funds, international small/value funds, and global hedged bond funds are probably their specialties unlikely to be easily found at comparable prices anywhere else.

Link from BogleHeads.org
I know some "DFA-affiliated advisors" use active funds. PCRIX, Pimco Commodity Real Return Fund is often suggested by at least one highly regarded "DFA Affiliated advisor".

Personally, I don't need hand-holding from an "advisor" when it comes to investing.
Read a few books by John Bogle, get advice from the BogleHeads forum, invest with Vanguard, and that's it!

zmre2b9 said:4. The results are for almost 8 years of data, and begin in January 1999 because this is when the Vanguard Small Cap Value Index began.I'm skeptical about any comparison that goes back less than 10 years. It is very possible that DFAs strategies have performed better over this period in excess of their fees but the performance may not continue in the future.

If I was going to pay for an financial adviser anyways and there was no difference in the fees, I might pick one that offered DFA funds.

For DIYs like myself, DFA wouldn't even be a possibility if I were interested because their funds can only be purchased through an participating adviser.

RedCobra said:For savvy investors like most of us here in FW, there is absolutely no need to go through an advisor to gain access to a fund. If DFA mandates this, I'd look elsewhere. Essentially what you are doing is adding another layer of fees on top of the fees the fund already charges, low as they may be. An advisor for the most part will simply listen to the types of funds/ETFs, etc. you like, those you're comfortable with, proceed to look for them, then pitch them to you. If you're interested, great. They collect their advisor fee and everyone's happy. If not, they look for something else.

The timeless, conventional wisdom is that 80% of active money managers fail to beat the indexes consistently over time. Well then the short answer is to find the 20% that do. Good, fundamental bottom-up value oriented stock picking at reasonable fees (1% or less) is the way I've been going for many years and I'm happy with the results.

I laugh at this. Savvy investors? Not likely. Show me your portfolio that has not only come close to the DFA portfolios, but done so with similar or less risk. This is the problem with the savvy investors here. They don't even know how to look at risk adjusted returns, let alone understand them.

I consider savvy investors who can exceed the DFA returns with lower risk, not ones who can't.

A few things I know about DFA. These are random facts that might be quite irrelevant in making investment decisions, but nonetheless, these are facts (or information):

1. DFA was founded by David Booth and Rex Sinquefield, both had MBA in Finance from The University of Chicago’s Graduate School of Business in 1960s. Booth also received a PhD in Finance from Chicago GSB. Rex Sinquefield is now retired, but David Booth still runs the firm.

2. David Booth made so much money from DFA that he donated US$300-Million (in cash, stocks, and in other equities) to The University of Chicago's Graduate School of Business last year (year 2008) in the middle of the US recession. This was a "naming right" deal for Booth. University of Chicago's Graduate School of Business was renamed as "Booth School of Business" in 2008.

3. Many Finance and Business faculties of U Chicago, and other Universities (such as, Ken French of Dartmouth's Tuck School) serve the advisory board of DFA.

4. DFA says they use academic finance research in practice. In particular, they provide investors opportunities to invest in various "dimensions" of systematic risk, such as, risk in value stocks, or risk in small size stocks etc. According to DFA's published statements, they do not "pick stocks" for building investment portfolios. However, they re-calibrate their portfolios periodically (that is, if a value stock becomes a growth stock, then it is eliminated from a "value portfolio", and similarly, if a growth stock now qualifies as a value stock then its been added to the "value portfolio"). So, the investment portfolios are not static over time.

5. There are 2 Harvard Business School cases on DFA. The year 2002 case is, in fact, intended as a 2nd edition of the 1993 case, but, I think it is worth reading both editions. You can buy them at:

http://cb.hbsp.harvard.edu/cb/web/search_results.seam?Ntt=Dimensional%2BFund%2BAdvisors&conversationId=5549

6. From what I have seen, DFA have hired some MBA(s) fresh out of the school who are strong in quantitative skills, in particular, in doing statistical and empirical analysis of data, but do not have the personality or the marketing skills or the interpersonal skills similar like the common Wall Street financial advisors or portfolio managers. However, DFA did not pay these new hires at the super-high compensation rate common in Wall Street.

OK. Have fun!

Tintin

Roughly -- very, very roughly -- DFA believes in equally-weighted indexing, as opposed to the more common capital weighted indexing used by most companies.

There's nothing wrong with the DFA funds. OTOH the amount charged by DFA advisers may be enough to wipe out any advantages the funds offer over more traditional cheap index funds, like Vanguard's.

RedCobra said:When I pay fees, I expect those fees to be earned through good old fashioned stock picking, not passive quantitative strategies requiring little in the way of manpower.

And I laugh too, all the way to the bank.

The research shows that good old fashioned stock picking does worse (much worse) than DFA's (or even Vanguard's) passive quantitative strategies.

Those who don't know anything about DFA or DFA advisers, I encourage you to either move along, or read and learn. Anyone who has intelligent informed information on DFA and their advisers (especially low fee ones), please share.