qandaQ:  You mentioned in your newsletter that DFA Funds are significantly better performers then Vanguard Funds. So why you recommend in your column only Vanguard funds and ETFs without a word of better DFA funds?

Q:  You mentioned in your newsletter that DFA Funds are significantly better performers then Vanguard Funds. So why you recommend in your column only Vanguard funds and ETFs without a word of better DFA funds?

A:  Great question.  It is relatively easy for me to make recommendations at Vanguard, Fidelity, Schwab and T. Rowe Price, but DFA funds are much more complex. They have several ways (and different funds) to manage value, small cap, international, global diversification, REITs and emerging markets. To recommend the best combination of DFA funds requires all lot of information about a client.

If I were your DFA advisor, I would want you to own approximately half of your equities in U.S and international, half of each the U.S. and international in large and small, and more than half in value with the balance in growth in the U.S. and international portions. That’s my DFA recommendation.
 
If a DFA advisor agrees with that portfolio, it would be up to him to decide which DFA funds should be used to accomplish that asset allocation.  What I suspect you will find is the advisor won’t agree with my basic recommendation, as every DFA advisor is free to use the DFA funds the way they want.  DFA educates advisors how to use their funds, but they do not dictate a particular asset allocation or particular DFA funds.  In fact, some DFA advisors use only one DFA fund, which I think robs investors of the return they could have achieved with a larger group of funds.  As an advisor, if I only use one fund, it makes my work very easy but it isn’t in the interest of most clients.