Dimensional Fund Advisors (DFA) was founded in 1981 by David Booth and Rex Sinquefield, graduates of the University of Chicago School of Business. Since then the company has grown into a fund family powerhouse that manages approximately $460 billion for investors worldwide. DFA does not sell its funds directly to individual investors. Financial advisors who wish to use DFA funds must be ‘vetted’ and go through a process which includes attending company training programs. DFA wants to be sure that advisors share the same philosophy and strategies that they do.
Eugene Fama, awarded the Nobel Prize in Economics in 2013 and a finance professor at the University of Chicago School of Business, was one of Booth’s mentors. He has been a DFA board member since the company’s inception. Fama is often called the father of the “efficient market hypothesis” – which assumes that market prices contain all information available. By following this theory, DFA assumes that markets are smarter than we are. As a result, the company does not believe in trying to time the market. Instead they take a long-term outlook that relies heavily on the academics of finance. They focus on diversification and seek better returns by tilting towards small cap and value stocks.
If you would like more information, please visit their website at www.dimensional.com.