Skip to main content
No. of Recommendations: 7
Highly regarded Dimension Fund Advisors (DFA) is converting four of its mutual funds with $26 Billion in assets to ETFs.

https://www.fa-mag.com/news/david-booth-s-dfa-starts-clock-o...

Dimensional’s ETF lineup will more than double after the conversions, which will reduce management fees by between 20% and 56% compared to the existing mutual funds, according to the filing.

The pioneering quant firm has aggressively targeted the $5.8 trillion U.S. ETF market after first announcing plans to enter the industry last June. It has already launched a trio of actively managed equity products, which debuted in November and December and have amassed more than $840 million in assets.

The conversions will affect the following funds:

• The Tax-Managed U.S. Equity Portfolio becomes the Dimensional U.S. Equity ETF
• The Tax-Managed U.S. Small Cap Portfolio becomes the Dimensional U.S. Small Cap ETF
• The Tax-Managed U.S. Targeted Value Portfolio becomes the Dimensional U.S. Targeted Value ETF
• The T.A. U.S. Core Equity 2 Portfolio becomes the Dimensional U.S. Core Equity 2 ETF

</snip>


Being able to buy DFA funds without the added cost of a DFA-approved advisor is a good deal.

Analyzing the 'high-fee' DFA-approved advisor's sales pitch.
https://retireearlyhomepage.com/low_fee_dfa.html

</snip>


intercst
Print the post Back To Top
No. of Recommendations: 1
“We view this event as a reflection of our continued efforts to apply innovative thinking in pursuit of better investment outcomes for our investors,” Dimensional Co-Chief Executive Officers Dave Butler and Gerard O’Reilly wrote in the filing.

...and they were getting their lunch stolen by Avantis.

https://www.avantisinvestors.com/content/avantis/en/individu...

Avantis started by ex-DFA people, offers ETFs.

Our approach combines the latest financial science with common sense investing principles and cost-effective implementation.

That said, it's clear to me that some people need an FA. They don't have a clue, don't want to learn, and need someone to stop them doing stupid stuff. I'd rather a friend go with a DFA approved advisor than do what some friends did - all their investments are in insurance products, even their college savings.
Print the post Back To Top
No. of Recommendations: 1
Very timely. My financial advisor just proposed rolling my 401k over to his firm as an IRA, and making it a Separately Managed Account. He even had an analysis of my current portfolio's expected return and volatility vs. the proposed expected return and volatility of a big pile of individual stocks and bonds. His recommendation has a higher expected return at a comparable (expected) volatility. There's even the attraction of several variations of "socially conscious" investing, so I can avoid the stocks of any companies that do things I dislike, even to the point of investing in only halal companies.

All that for only one percent of assets under management.

Except, I don't have any "socially conscious" ax to grind with my stock picks. I also purposely have a "bond tent" with a higher cash/bond allocation than I will a few years out from now--I have lots of that to tide me over from ER to when I begin social security. I can imagine that his proposed arrangement has the likelihood of higher returns, but with a *guarantee* of a one percent headwind (year in, year out). Also, when I move my 401k money to an IRA managed by me, I'll be able to get 0.15% annual fee funds and ETFs instead of the higher fees I'm paying in the company's 401k funds.

I *did* manage to track down one of the funds (large cap growth) from one of the advisor's my FP proposes to use, and it's trailing its benchmark index by 1.5%. :-O
Print the post Back To Top
No. of Recommendations: 3
All that for only one percent of assets under management.

</snip>


I put together a "shaft detector" a few years ago to show the effect of advisor fees. At 1% of assets, the advisor is going to skin you for about 20% of your net worth over 30 years.

https://www.retireearlyhomepage.com/daveramsey.html

The most highly compensated hours of my engineering career was the time I spent at work reading financial publications and studying about financial planning rather than doing anything extra that may or may not have resulted in a raise or promotion.

The premium you'll earn for doing it yourself is substantial.

intercst
Print the post Back To Top
No. of Recommendations: 7
At 1% of assets, the advisor is going to skin you for about 20% of your net worth over 30 years.

That's about right.

But consider a variable annuity contributed to over 30 years by a government worker. Try -46.6% lost to expenses over 30 years compared to -3.7% in expenses over the same period with a portfolio of ETFs with a weighted expense ratio of .22%.

I did an article on this in 2017 at SA that some may find interesting

https://seekingalpha.com/article/4045368-retirement-portfoli...

BruceM
Print the post Back To Top
No. of Recommendations: 0
BruceM writes,

But consider a variable annuity contributed to over 30 years by a government worker. Try -46.6% lost to expenses over 30 years compared to -3.7% in expenses over the same period with a portfolio of ETFs with a weighted expense ratio of .22%.

</snip>


I lived in Houston for about 20 years and it always amazed me that the Texas Teachers 403(b) plan was administered by VALIC with 2% to 3% per annum lost to fees and expenses.

Couldn't one of the math teachers tell them how much they were getting screwed? Or are the people going into education really that inept?

intercst
Print the post Back To Top
No. of Recommendations: 1
Or are the people going into education really that inept?

I assume this is a rhetorical question. Because you couldn't possibly be that naive.
Print the post Back To Top
No. of Recommendations: 4
Couldn't one of the math teachers tell them how much they were getting screwed? Or are the people going into education really that inept?

I'm sure that if Dad had the options we do today to invest in the market, that's where he would have been. As it was, the annuities they got through TIAA CREF gave them a surprise retirement at 58. Perhaps sooner had they been looking for it. It's what taught me the importance of planning for my retirement or FU money, whichever way you want to look at it, and started me planning my retirement at 19.

Planning is good, even if it's not perfect, it's better than nothing.

IP
Print the post Back To Top
No. of Recommendations: 0
I did an article on this in 2017 at SA that some may find interesting
https://seekingalpha.com/article/4045368-retirement-portfoli......


It's probably an interesting piece, but I don't care to create another account on a site to read one article.
Print the post Back To Top