Anonymous

24 Jun 2020

∙

General Investing

What are your opinions on Dimensional Funds by Dimensional Fund Advisors as an alternative to S&P 500 index funds?

Is it a good alternative? what are the pros and cons? should I be considering investing here instead?

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Hariz Arthur Maloy

23 Dec 2019

Independent Financial Advisor at Promiseland Independent

Firstly, you can't compare these two. They track different indices and have different objectives.

There are numerous funds by DFA but I'll use 2. The World Equity fund and the Global Core Equity fund. These funds track the MSCI All Country World and the MSCI World respectively.

So they are globally diversified equity funds. The difference between a standard index fund tracking these indices is that DFA tilts their portfolio towards the drivers of expected return. Namely, small cap, value, and profitable companies.

While the index are market cap, which means they hold bigger companies, DFA tends to hold smaller and value companies in relation to the index.

So you can't compare the S&P 500 to the MSCI World, you can't compare these two.

Also these funds hold 7000 to almost 11000 securities, not just 500.

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