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DFA vs. Vanguard

 

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We are often asked which mutual funds we recommend in various asset classes.  After applying our stringent selection criteria, it often comes down to Vanguard and DFA mutual funds.

For more information on The Vanguard Group, see here.

For more information on Dimensional Fund Advisors (DFA), see here.

While Vanguard’s funds are among the very best available (principally due to their extremely low fees), some funds from DFA are, in some ways, superior.

The table below compares DFA funds with Vanguard funds in each of several asset classes.  For each asset class, DFA’s fund is listed along with Vanguard’s fund.  Each entry includes the fund name, NASDAQ symbol, and expense ratio.  For each asset class, there is also a brief analysis of the relevant differences between the two offerings.  Within each asset class, we tried to assess which offering is “better” – DFA’s or Vanguard’s (or any other fund).  We have highlighted the preferred fund in each case by bolding and italicizing its information.

Note that “better” refers to our expectation of which fund will be a better holding in the long term.  In making such a determination, we take into account not only expected long-term performance, but also long-term expected risk/volatility and any trading restrictions imposed by the funds.  For more information on the criteria we use to judge mutual funds, see here.

Asset Class

DFA

Vanguard

Analysis

Money Market N/A

Vanguard Prime Money Market Fund (VMMXX)

E/R: 0.23%

DFA does not have an offering in this asset class.

Another fine choice would be the TIAA-CREF Money Market Fund (TIAXX).  It has an E/R of 0.23%.

Short Term US Bonds DFA Five-Year Government Portfolio (DFFGX)

E/R: 0.23%

Vanguard Short-Term Corporate Bond Index Fund Admiral Shares (VSCSX)

E/R: 0.12%

See our detailed discussion of the leading options for this asset class here.

Short Term Global Bonds

DFA Five-Year Global Fixed Income Portfolio (DFGBX)

E/R: 0.28%

or

DFA Short-Term Extended Quality Portfolio (DFEQX)

E/R: 0.22%

or

DFA Two-Year Global Fixed Income Portfolio (DFGFX)

E/R: 0.18%

N/A Vanguard does not have an offering in this asset class.

See our detailed discussion of the leading options for this asset class here

For those who do not have access to DFA, we suggest they limit their bond holdings to domestic bond funds.

Short Term Tax-Exempt Bonds

DFA Short-Term Municipal Bond Portfolio (DFSMX)

E/R: 0.23%

Vanguard Limited-Term Tax-Exempt Fund Admiral Shares (VMLUX)

E/R: 0.12%

See our detailed discussion of the leading options for this asset class here.

Inflation-Protected Securities

DFA Inflation-Protected Securities Portfolio (DIPSX)

E/R: 0.13%

Vanguard Inflation-Protected Securities Fund Admiral Shares (VAIPX)

E/R: 0.11%

See our detailed discussion of the leading options for this asset class here.

Balanced Funds     See our detailed discussion of the leading options for this asset class here.

Large Cap

DFA U.S. Large Cap Equity Portfolio (DUSQX)

E/R: 0.19%

Vanguard Large-Cap Index Fund Admiral Shares (VLCAX)

E/R: 0.10%

See our detailed discussion of the leading options for this asset class here.

Tax-Managed Large Cap

DFA Tax-Managed US Equity (DTMEX)

E/R: 0.22%

Vanguard Tax-Managed Capital Appreciation Fund Admiral Shares (VTCLX)

E/R: 0.12%

See our detailed discussion of the leading options for this asset class here.

The DFA fund isn't really a "large-cap" fund — it is an all-market fund.

Large Cap Value

DFA U.S. Large Cap Value Portfolio (DFLVX)

E/R: 0.28%

Vanguard Value Index Fund Admiral Shares (VVIAX)

E/R: 0.12%

See our detailed discussion of the leading options for this asset class here.

Our first choice here is the Guggenheim S&P 500 Pure Value ETF (RPV).  It has an E/R of 0.35%.

Tax-Managed Large Cap Value

DFA Tax-Managed U.S. Marketwide Value Portfolio (DTMMX)

E/R: 0.38%

Vanguard Mega Cap 300 Value ETF (MGV)

E/R: 0.13%

See our detailed discussion of the leading options for this asset class here.

Our first choice here is the Guggenheim S&P 500 Pure Value ETF (RPV).  It has an E/R of 0.35%.

Large Cap Momentum N/A N/A Neither DFA nor Vanguard has an offering in this asset class.

Our first choice here is the AQR Momentum Fund (AMOMX).  It has an E/R of 0.49%.

Tax-Managed Large Cap Momentum N/A N/A Neither DFA nor Vanguard has an offering in this asset class.

Our first choice here is the AQR Tax-Managed Momentum Fund (ATMOX).  It has an E/R of 0.54%.

Small Cap

DFA U.S. Microcap Portfolio (DFSCX)

E/R: 0.52%

Vanguard Small Cap Index Fund ETF Shares (VB)

E/R: 0.17%

See our detailed discussion of the leading options for this asset class here.

Our first choice here is the Bridgeway Ultra-Small Company Market Fund (BRSIX).  It has an E/R of 0.77%.

Tax-Managed Small Cap

DFA Tax-Managed U.S. Small Cap Portfolio (DFTSX)

E/R: 0.53%

Vanguard Tax-Managed Small Cap Fund Admiral Shares (VTMSX)

E/R: 0.18%

See our detailed discussion of the leading options for this asset class here.

Our first choice here is the iShares Microcap Index Fund (IWC).  It has an E/R of 0.60%.

Small Cap Value

DFA U.S. Small Cap Value Portfolio (DFSVX)

E/R: 0.52%

Vanguard Small Cap Value Index Fund ETF shares (VBR)

E/R: 0.23%

See our detailed discussion of the leading options for this asset class here.

Our first choice here is the Guggenheim S&P SmallCap 600 Pure Value ETF (RZV).  It has an E/R of 0.35%.

Tax-Managed Small Cap Value

DFA Tax-Managed U.S. Targeted Value Portfolio (DTMVX)

E/R: 0.44%

Vanguard Small Cap Value Index Fund ETF shares (VBR)

E/R: 0.23%

See our detailed discussion of the leading options for this asset class here.

Our first choice here is the Guggenheim S&P SmallCap 600 Pure Value ETF (RZV).  It has an E/R of 0.35%.

Small Cap Momentum N/A N/A Neither DFA nor Vanguard has an offering in this asset class.

Our first choice here is both the AQR Small Cap Momentum Fund (ASMOX, E/R: 0.65%) and the Bridgeway Small Cap Momentum Fund (BRSMX, E/R: 0.90%).

Tax-Managed Small Cap Momentum N/A N/A Neither DFA nor Vanguard has an offering in this asset class.

Our first choice here is the AQR Tax-Managed Small Cap Momentum Fund (ATSMX).  It has an E/R of 0.70%.

Foreign Developed Markets Large Cap

DFA Large Cap International Portfolio (DFALX)

E/R: 0.30%

Vanguard Developed Markets Index Fund Admiral Shares (VDMAX)

E/R: 0.09%

See our detailed discussion of the leading options for this asset class here.

Our first choice here is the AQR International Momentum Fund (AIMOX).  It has an expense ratio of 0.68%.

Tax-Managed Foreign Developed Markets Large Cap

N/A

Vanguard Tax-Managed International Fund Admiral Shares (VTMGX)

E/R: 0.12%

DFA does not have an offering in this asset class.

See our detailed discussion of the leading options for this asset class here.

Foreign Developed Markets Large Cap Value

DFA International Value Portfolio (DFIVX)

E/R: 0.45%

Vanguard International Value Fund (VTRIX)

E/R: 0.39%

See our detailed discussion of the leading options for this asset class here.

Tax-Managed Foreign Developed Markets Large Cap Value

DFA Tax-Managed International Value Portfolio (DTMIX)

E/R: 0.55%

N/A

Vanguard does not have an offering in this asset class.

See our detailed discussion of the leading options for this asset class here.

Foreign Developed Markets Large Cap Momentum N/A N/A Neither DFA nor Vanguard has an offering in this asset class.

Our first choice here is the AQR International Momentum Fund (AIMOX).  It has an E/R of 0.65%.

Tax-Managed Foreign Developed Markets Large Cap Momentum N/A N/A Neither DFA nor Vanguard has an offering in this asset class.

Our first choice here is the AQR Tax-Managed International Momentum Fund (ATIMX).  It has an E/R of 0.70%.

Foreign Developed Market Small Cap

DFA International Small Company Portfolio (DISMX)

E/R: 0.45%

Vanguard International Explorer Fund (VINEX)

E/R: 0.36%

See our detailed discussion of the leading options for this asset class here.

Foreign Developed Market Small Cap Value

DFA International Small Cap Value Portfolio (DISVX)

E/R: 0.71%

N/A

Vanguard does not have an offering in this asset class.

Foreign Emerging Market Large Cap

DFA Emerging Markets Portfolio (DFEMX)

E/R: 0.61%

Vanguard FTSE Emerging Markets Index Fund Admiral Shares (VEMAX)

E/R: 0.15%

See our detailed discussion of the leading options for this asset class here.

Foreign Emerging Market Large Cap Value

DFA Emerging Markets Value Portfolio (DFEVX)

E/R: 0.61%

N/A

Vanguard does not have an offering in this asset class.

See our detailed discussion of the leading options for this asset class here.

Foreign Emerging Market Small Cap

DFA Emerging Markets Small Cap Portfolio (DEMSX)

E/R: 0.82%

N/A

Vanguard does not have an offering in this asset class.

See our detailed discussion of the leading options for this asset class here.

Foreign Frontier Market Large Cap

N/A

N/A

Neither Vanguard, nor DFA has an offering in this asset class.

Our preferred holding in this asset class is the Claymore/BNY Mellon Frontier Markets ETF (FRN).  E/R: 0.65%.

US Real Estate Investment Trusts (REITs)

DFA Real Estate Securities Portfolio (DFREX)

E/R: 0.18%

Vanguard REIT Index Fund Admiral Shares (VGSLX)

E/R: 0.12%

See our detailed discussion of the leading options for this asset class here.
Foreign REITs DFA International Real Estate Securities Portfolio (DFITX)

E/R: 0.41

Vanguard Global ex-U.S. Real Estate ETF (VNQI)

E/R: 0.35%

See our detailed discussion of the leading options for this asset class here.

Commodity Futures

DFA Commodity Strategy Portfolio (DCMSX)

E/R: 0.35% 

N/A

Vanguard does not have an offering here. 

See our detailed discussion of the leading options for this asset class here.

Bottom Line

bulletIf you are managing your investments yourself, then you don't have access to DFA funds and we would therefore be primarily recommending Vanguard funds.  If you diligently follow a well thought out investment plan, the Vanguard funds will serve you quite well.  In particular, for those doing it themselves, we might strongly recommend one of Vanguard's balanced funds, in particular, one of their "Target Retirement" funds could serve as an "all-in-one" complete investment portfolio (i.e., for you to put all your money in).
 
bulletIf you are having your assets professionally managed, we would recommend (what we believe to be) "best-in-class" investments in each asset class.  Our current preferences for each asset class are listed in the table above.
 
bulletFor assistance in making the decision as to whether or not you should hire an investment advisor, see here.

This web page contains the current opinions of Eric E. Haas at the time it is written and such opinions are subject to change without notice.  This web page is intended to serve two purposes:

bulletTo educate the public; and
bulletTo provide disclosure of Mr. Haas' opinions to prospective clients.  We believe that prospective clients are well-served by being made aware of what they are buying — and what they are buying is advice that is based on these opinions.

We believe the information provided here to be useful and accurate at the time it is written.  Information contained herein has been obtained from sources believed to be reliable, but is not guaranteed. 

No investor should invest solely on the basis of information listed here.  Before investing, it is important to consult each prospective investment's prospectus and consider both its risk/return characteristics and its effect on your overall portfolio.

This information is not intended to be a substitute for specific individualized tax, legal, or investment planning advice.  Where specific advice is necessary or appropriate, Altruist recommends consultation with a qualified tax adviser, CPA, financial planner, or investment adviser.  If you would like to discuss the rationale or support for any particular idea expressed on this web page, feel free to contact us.

 

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