DFA Target Date Retirement Income Funds

[donheff]

I haven't seen this article linked before but forum administrators should feel free to delete the thread if it has already been posted. Wade Pfau has posted an analysis of DFA's Target Date Retirement Income funds. DFA takes a standard target date AA approach in younger years and then starts moving a significant portion to TIPS as retirement approaches. At age 65 they go to 75% TIPS designed to support a guaranteed, inflation protected income for 25 years. Interesting approach for someone who wants close to a guarantee.

 

[nun]

Zvi Bode will be happy. However, I think that TIPS heavy income portfolios don't get much of a look in because people want more income from their retirement balances. It's the same problem annuities have, you're trading the potential for higher income against security and unfortunately a lot of people simply haven't saved enough to be conservative. If you can afford 75% TIPS then you have done well in the accumulation phase.

 

[samclem]

This product will probably be popular with those who are fans of Bernstein's "Liability Matching" ideas. It would, however not go down well with me to have to pay an FA his yearly "cut" in order to gain access to DFA, just so they could put 75% of my money into TIPS. Lots of folks are paying 1% of their total portfolio to FAs every year, and with TIPS having real yields today of less than that (and sometimes less than zero), and you'd also still have to pay DFA's ER, well . . . one would at least have to shop around for a very cheap FA entry gate to DFA.

Thanks, it's interesting to see these new products and approaches.

 

[exnavynuke]

It's really not that hard to buy TIPS on your own so I can't see why anyone would want to pay for a FA AND the expense ratio (I'm pretty sure VRRDX and the others offer a net ER of about .6%) for someone else to do that for you.

 

[nun]

This product will probably be popular with those who are fans of Bernstein's "Liability Matching" ideas. It would, however not go down well with me to have to pay an FA his yearly "cut" in order to gain access to DFA, just so they could put 75% of my money into TIPS. Lots of folks are paying 1% of their total portfolio to FAs every year, and with TIPS having real yields today of less than that (and sometimes less than zero), and you'd also still have to pay DFA's ER, well . . . one would at least have to shop around for a very cheap FA entry gate to DFA.

Thanks, it's interesting to see these new products and approaches.

The upfront cost to get access to DFA's low cost funds has always been a big black mark against them. If you are getting 2% from TIPS then keeping fees low is even more important.

 

[bmcgonig]

The upfront cost to get access to DFA's low cost funds has always been a big black mark against them. If you are getting 2% from TIPS then keeping fees low is even more important.

I looked into DFA a few years back. Some asset managers are cheap enough e.g., this guy charges a fixed fee I.e., not a percentage, that he says works out to between 0.05% and 0.15% of assets.

I dont use them so not a recommendation per se. But he's a cheap way to get access to DFA.

https://www.evansonasset.com/fees-and-services-11.htm