DFA: the Apple to Vanguard's Google?
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Friday, January 16, 2015

DFA: the Apple to Vanguard's Google?

If Vanguard is the mutual fund industry's Google (or Amazon), practically giving away most of what it does to gain ever-increasing market share, then Dimensional Fund Advisors [profile] is the industry's Apple, more concerned about offering premium products than about gaining massive market share.

Charles Stein of Bloomberg penned a long profile of the quiet, Austin-based, quasi-indexing giant. Bloomberg of course talked to DFA chairman and co-CEO David Booth. David Butler, head of global financial advisor services, also offers a quote or two. Linda York of Cogent and Alex Bryan of Morningstar both weigh in, as do a handful of DFA's Kool-Aid-drinking advisors. And the article also mentions the importance to DFA of the work of Eugene Fama (a Nobel prize-winning economist) and Kenneth French (Fama's research partner).

Somehow Bloomberg calls DFA "small". I guess $381 billion is small compared to Vanguard's $3 trillion.

On the flip side, there are several notable omissions from the article. Bloomberg notes that Robert Merton (another Nobel Prize-winning economist) "is involved in designing products for the company," without mentioning what those are. As reported by our sister publication, 401kWire, DFA's Michael Lane is using Merton's theories for a retirement product which DFA is partnering with TIAA-CREF on.

Also unmentioned in the Bloomberg piece: Eduardo Repetto, DFA's other co-CEO, who used to be a rocket scientist. Booth does tell the pub that he's refused buyout and IPO offers, insisting that "the next generation of leadership is in place."

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