Advantagesof DFA Funds

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Advatanges of using DFA Mutual funds in a client's investment portfolio.

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Advantagesof DFA Funds

  1. 1. Advantages of DFA Institutional Funds More consistent cash flows: Retail mutual funds are subject to more erratic deposits and withdrawals which causes increased costs for long term shareholders due to increased trading activity. DFA is famous (in institutional circles) for their discount block (large transaction) trading. The reduced trading costs translate to better investment returns. DFA has very low expense ratios similar to index funds, which on average, saves 1% per year in reduced expenses compared to actively managed retail funds. DFA funds more precisely define their market segments; large vs. small companies, value vs. growth, etc. This results in better asset allocation controls and ultimately better returns. Since DFA constructs their funds from scratch, they are not subject to the immediacy of trading requirements for traditional index funds. This results in better opportunities to make trades on a more favorable price basis. Low turnover: The average turnover of DFA funds in only 10% compared to 65% for actively managed retail funds. This results in lower trading and taxation costs to the investor. Tax controls: DFA has been the world leader in developing strategies and mutual funds to limit the costs of taxation for investors. Reduced taxation means better bottom line returns for investors. Innovation: DFA is considered the world leader in developing investment products and strategies based on academic research. DFA is affiliated with some of the world’s top academics such as Eugene Fama, Ken French, George Constantinides, John Gould, Roger Ibbotson, Donald Keim, Robert Merton, Myron Scholes, Abbie Smith and Marvin Zonis. 800 683.5800 Summit Portfolio Management ©2009

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