Investing - Theory, News & General • The Day The Factors Died

Not really skirting, there’s a nearly 1% annualized premium

https://testfol.io/?d=eJytj7FqAzEMht9Fs ... aFcQ%3D%3D

73 bps, against the more expensive class (VTSMX instead of VTSAX) - just switching to VTSAX saves 7 bps from 2000 forward (per your linked site). And that's before you add in DFA advisor fees.

If you switch the comparison to DVLVX, then you're minus 143 bps with DFA, and again, that's BEFORE the VTSAX/VTSMX adjustment and any DFA advisor fees.

Finally, if you switch to DFSCX (DFA's original fund), and switch VTSMX to VFINX (to extend the comparison back), the DFA fund is crushed (by over 400 bps), but the data on testfol.io only goes back to 1988, so it's not a full-length comparison.

So yeah, if you skip the FIRST fund that DFA offers, pick the RIGHT one of the next two big funds they offer, compare against a modestly inflated-cost Vanguard fund, assume no fees to access the DFA fund, ignore the DFA fund's higher risk and lower Sharpe (and likely higher tax-drag), then yeah, you come out very modestly ahead. Congrats.

VTSMX is used for the longer history

DFSVX as well, even though AVUV is cheaper

A nearly 1% increase in the US is not a modest difference, and the premiums are even larger internationally

I'm 55, so I'm nearly 100 years old, right?

The *first* DFA fund underperformed.

Of the next two main DFA funds, one (DFLVX) underperformed by a lot. The other (DFSVX) outperformed by ~73bps, before you make a ~5 bps adjustment for using VTSAX, so really ~68 bps, and you had to pay, separately, another ~100 bps for much of its history to access it, and it had higher tax drag and significantly higher risk and lower Sharpe.

Other than THAT, how was the play, Mrs. Lincoln?

I’m not retroactively decreasing bps fees when that’s what they were for funds you could invest in at the same

You could invest in VTSAX from ~2000. If you had VTSMX, Vanguard would move it to VTSAX ~automatically for you, if you had a decent amount in there (~$50K), which surely anyone with a DFA advisor had. The 5 bps estimate is based on the 7 bps spread over 2000-2024, applied back to include the ~7 years before, that only VTSMX was available.

Look at all the hoops you had to jump through to make your case.

Hoops? 2 out of the 3 DFA early funds (including the first one), ~sucked, likely by much more than the 1 very modest winner did OK. But surely for Avantis or whatever, you know exactly WHICH of their offerings will be a winner, in advance, right? And yes, risk and taxes matter. And yes, you had to pay a DFA advisor to invest in DFSVX for years (maybe still today?)

I don’t need an advisor fee to invest in AVUV today, I’m also only paying 25 bps

Fine, but now you're justifying a different fund, by a different company, using DFSVX's track record. I mean, I'm a great fundamental stock picker - I pick like Warren Buffett. And look at *his* track record.

I don’t care that the volatility is higher, that’s why there’s a premium

Cool. So go for leverage. May I suggest this?

Statistics: Posted by psteinx — Tue Aug 13, 2024 3:50 pm — Replies 260 — Views 21154