Media Quotes about DFA
DFA may not be a household name, but they are widely recognized in our industry, and highly respected by the media. The following are some of the more recent quotes about DFA.
"In his years of researching the stock market, Fama has detected only three patterns in the data. Over the very long haul, stocks have tended to outperform bonds, and the stocks of both small-cap companies and companies with high book-to-market ratios (value stocks) have yielded higher returns than other companies' stocks. These are the facts." Michael Lewis, Conde Nast Portfolio.com, December 2007.
Dimensional Fund Advisors in Santa Monica, CA, which has offered funds for many years that are based on Fama and French’s research, has successfully tweaked many of their international funds to capture small-cap and value premiums. DFA International Value (DFIVX) and the firm’s other large-cap overseas value funds are also clustered at the very top of the performance heap." Lynn O'Shaughnessy, Ask-Lynn.com, July 2007.
“Instead of buying all of the stocks in an index devised by someone else, DFA defines each asset class itself, based on companies' market capitalizations and book-to-market ratios, or book values relative to market values. The firm weeds out stocks that aren't traded much because those shares are relatively expensive to buy and sell." Seth Lubove, Bloomberg, March 2007.
"If I ever decided to use an advisor personally, I’d limit my search to someone who invests with DFA Funds.” Lynn O’Shaughnessy, Union Tribune, January 2007.
“The dollar-weighted returns of DFA funds over the past 10 years are actually higher than thier time-weighted return. This suggests that advisors who use DFA engourage very smart behavior among their clients, even buying more out-of-favor segments of the market and riding them up, rather than buying at the peak and riding the trend down, which is usually the case with fund investors." Don Phillips, Morningstar, November 2006.
"While Dimensional’s ocean-view location may suggest extravagance, a key to understanding its approach is its parsimonious tendencies with investors’ money. Minimizing trading costs is a priority, and its managers spend much time working out ways to trade optimally.” Joanna Ossinger, The Wall Street Journal, November 2006.
“There's no denying DFA's appeal these days to the institutions running pension funds and to the financial advisers steering individuals' portfolios." Scott Woolley, Forbes, October 2006.
"For a journalist who spends most of his time trying to ferret out alluring stock ideas and smart stockpickers, a trip to the Santa Monica, California headquarters of Dimensional Fund Advisors poses certain philosophical challenges. DFA's approach to managing money starts with the idea that stock-picking is basically futile." Eric J. Savitz, Barron's, January 2006.
"Dimensional, under Sinquefield and co-founder David Booth, was one of the pioneers of “passive” stock market investing – a discipline that sees no merit in trying to pick individual winners among equities, or in trying to time market swings.” Tom Petruno, Los Angeles Times, December 2005.
“It’s no surprise that DFA’s Ken French has strong opinions about market efficiency. Still, who else could tell a room full of portfolio managers that it’s nearly impossible to find managers who can beat the market and get a positive response from his audience?” Christina Grotheer, CFA Magazine, September 2005.
“Most mutual fund managers failed to beat the major market indexes last year, according to a report from Standard & Poor’s, reflecting a trend that shows passive investing delivers better returns over the long haul.” Meg Richards, AP Business Writer, January 2005.
“Why are you reading about DFA this morning? Because if you embrace the concept of indexing, DFA is an option that you may wish to explore. If you like Vanguard index funds, you’ll probably go gaga over DFA’s lineup.” Lynn O’Shaughnessy, Union Tribune, June 2004.
“So what do DFA’s investors get from this firm that bends the rules? More often than not, they get richer. At least that’s what its track record suggests. DFA’s goal is to add one or two percentage points of performance a year over conventional benchmarks.” Lynn O’Shaughnessy, Union Tribune, June 2004.
“You’re probably wondering why you’ve never heard of DFA. That’s easy. Historically, the firm has primarily invested institutional money. The California Public Employees’ Retirement System, or CalPERS, Stanford University, Boeing, PepsiCo and Kellogg have been a few of its clients. The privately held firm also doesn’t advertise and it won’t allow individuals to invest directly with it. The firm once politely declined to accept $26 million from a wealthy investor.” Lynn O’Shaughnessy, Union Tribune, June 2004
“Dimensional managers prefer to call what they do ‘structured asset management.’ They target a class of assets in which to invest, buy them as cheaply as possible and keep portfolio turnover low and investor expenses to a minimum, usually below 0.50% of the money invested. Their approach is not indexing per se, though it has jokingly been called ‘indexing on steroids’.” Ann Perry, TheStreet.com, May 2004.
“The ability to screen stocks with sophisticated mathematical techniques and to buy below the bid are among the firm’s competitive advantages.” Howard Isenstein, The New York Times, January 2004.
“Paul Hergert, who covers DFA for Morningstar, said it had ‘a good reputation in the financial planning and institutional communities,’ because of its specific style, low costs and good performance.” Howard Isenstein, The New York Times, January 2004.
“Do your portfolio moves seem too frequent and leave you quesy? Then D-F-A may spell relief.” Robert Barker, BusinessWeek, November 2002.
“The reverence DFA enjoys among many of the 300-plus advisers who use its funds is legendary. Listen to true believers talk, and it wouldn’t require a leap of faith to imagine that if God were an investor, Heaven would use DFA funds exclusively.” Lynn O’Shaughnessy, Bloomberg Wealth Manager, November 2002.
“DFA views its job as bridging the gulf between the ivory-tower academics and the professionals in the trenches.” Lynn O’Shaughnessy, Bloomberg Wealth Manager, November 2002.
“Dimensional Fund Advisors might be one of the best-kept secrets in the mutual fund industry.” Beverly Goodman, TheStreet.com, August 2002.
“By minimizing risk, trading costs and taxes, investors over time can achieve the best risk-adjusted return for an asset class. Combine that with proper asset allocation within your portfolio and you’ll achieve returns that are at least consistent with the overall market while losing less sleep.” Beverly Goodman, TheStreet.com, August 2002.
“Buffett has said he’s lucky if he can find one good stock to buy every two years. The average actively managed equity mutual fund replaces its entire portfolio of more than 100 stocks every year. These trading costs, which are not included in a fund’s expense ratio, make it that much harder for active managers to beat their benchmark. High ratios to support expensive research departments make it harder still. You don’t have to be a finance professor to figure out that DFA’s approach gives you a head start in the race for returns.” Timothy Middleton, CNBC on MSN, June 2002.
“For those investors who haven’t heard of DFA, think of Vanguard with a few potential Nobel laureates hanging around the soda machine. Unfortunately, it is very difficult for individuals to get their money into this firm’s collection of low-cost, index-like funds.” Dagen McDowell, TheStreet.com, July 1999.
“Suppose you made a list of the smartest people alive in finance – those who have done the most to advance our understanding of how the stock market really works. Somewhere near the top you’d surely place Eugene Fama of the University of Chicago, the leading champion of the efficient-market theory and a favorite to win the Nobel Prize one day. You’d obviously want to include Merton Miller of Chicago, who earned a Nobel Prize by analyzing the effect of a corporation’s capital structure on its stock price, and Myron Scholes of Stanford, who won his Nobel Prize by explaining the pricing of options. You’d also pencil in Fama’s collaborator Kenneth French of MIT, as well as consultant Roger Ibbotson and master data cruncher Rex Sinquefield, who together compiled the most trusted record of stock market returns going back to 1926.
What would you give to know how these titans invest their own money? Well, don’t give too much, because all you have to do is look at the funds of one Santa Monica money management firm, Dimensional Fund Advisors.” Shawn Tully, Fortune, July 1998.
“Then as now, DFA owed much of its outperformance to a fierce attention to costs. After all, in an efficient market, costs are the one thing you can control. In addition to charging low management fees, DFA gains on the competition by sharp trading. Part of its advantage is size: As the nation’s largest market maker in small caps, DFA is the first stop for active managers desperate to buy or sell blocks of small stocks. Says Robert Deere, the head of trading: ‘We make it as painful for them as possible’.” Shawn Tully, Fortune, July 1998.