Recently, we drew your attention to our strong portfolio performance in 2016. Today we highlight the powerhouse behind our successful investment strategy.
We invest the majority of our clients' funds with Dimensional Fund Advisers (DFA). They are the sixth largest mutual fund manager in the US with $620 billion under management. DFA also has a large presence in Australia where they manage the investment funds we use for our portfolios. What we like about them is their evidence-based investment approach. They don't make a song and dance of their success or the Nobel prizes won by their academic directors.
With my training in science and commerce, I place high value on an evidence-based approach to making great decisions. As a result, I admire DFA’s commitment to relentless research into security prices, bringing us closer to understanding efficient capital markets. DFA applies this evolving knowledge in their funds management business. They are mostly unknown to the public as they don't see any value in brand marketing. Clients are instead introduced to them by carefully-selected and accredited independent advisers around the world who understand and adopt their investment philosophy.
Dimensional has long recognised the importance of environmental, social and governance (ESG) factors, and a year ago launched a global sustainability fund. Built on the same principles as their other funds, it brings Dimensional“s evidence-based approach to creating a very sophisticated and elegant approach to responsible investing.
The beauty of our investment approach is that it allows us to be better at our jobs of helping people achieve their life goals, rather than chasing returns, which according to academic research is a futile pursuit.
The Wall Street Journal recently summed up the essence of DFA in the article The Active-Passive Powerhouse, highlighting how they are drawing nearly US$2 billion in net assets per month while other firms struggle. We thought you might like to read the article yourself; please click here.
Success as an investor starts with the key questions of why, what, where, when and how.
Recently, one of America’s largest life insurers (New York Life) did a survey of over 2,000 people to find out what they considered to be their largest financial mistakes, and how long it took to recover from them.
Rob and Mary