Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Great DFA vs Vanguard Analysis in Index Investor
Old 12-08-2004, 08:33 AM   #1
Thinks s/he gets paid by the post
 
Join Date: Mar 2004
Posts: 1,318
Great DFA vs Vanguard Analysis in Index Investor

The new November Index Investor is available and has a great analysis of Vanguard vs DFA funds, asset category by asset category. Very helpful imho.

I think Index Investor has a $25 annual fee, but I have found many useful articles there. I am pasting in the free email they sent below describing other stuff in this month's issue.

http://indexinvestor.com/Members/200...er/nov045.php3

Also some useful info on an ETF/ public fund that mimics the long-short hedge fund strategy.

btw, if anyone is put off by DFA advisor fees, my advisor has given me a flat fee (1k per year) for an annual consultation and access to all the funds and institutional low-fee versions of other things like RPIBX, QRAAX (commodities) and foreign bonds. This is much better than the 1% per year that most DFA advisors want. If anyone wants his name PM me. (I have no financial interest in this or Index Investor!)

Info from Index Investor email:

This month's letter to the editor reviews the source of returns on
commodity
index investments. Since these indices are based on investments in
commodity
futures contracts, their returns principally reflect compensation for
bearing
the risk of short-term price fluctuations. Hence, it is possible to
earn a
positive return on a commodity index even when the price of the
underlying
commodity is falling. We note another study by the IMF that finds that
commodity
price volatility steadily increased between 1862 and 1999, even as real
prices
declined by an average of one percent per year. The IMF finds that
this slight
real price decline was completely overwhelmed by the rise in price
volatility.
Hence the need for futures contracts that insure against this
volatility, and
the profitability of investing in them. In our product and strategy
notes, we
relate these points to a discussion about the new gold exchange traded
fund
(ticker GLD) that was recently launched in the United States (similar
products
already exist in Australia, South Africa and the U.K.). The price of
this ETF
is equal to one-tenth the price of a troy ounce of gold. It is also
backed by
an amount of physical gold equal to ten percent of the notional ounces
of gold
represented by the market value of the ETF. We do not find the
structure of
this ETF as attractive as investing in either gold futures or physical
gold coins.
The former have a more reliable source of returns, while the latter are
more
useful as a store of value and medium of exchange under the "worst case
scenario"
that is on many people's minds when they invest in gold. Nevertheless,
the new
gold ETF has quickly attracted over $1 billion in investment since it
was launched
in mid-November. The reason for this may have something to do with our
last
product and strategy note, which reviews the current status of the
economic scenario
indicators we described in our September economic update. We conclude
that the
probability of our recession/deflation scenario developing has
increased.

Our feature article addresses a problem faced by many investors:
whether to
invest in index mutual funds from Dimensional Fund Advisers (DFA), even
though
this can only be done through financial advisers who usually charge a
fee equal
to one percent of the assets they manage. We compare the historical
returns and
risks of DFA and comparable Vanguard index mutual funds in different
asset classes.
In close cases, we perform simulation analysis to assess the impact of
higher DFA
fees on the probability of achieving a target portfolio accumulation or
withdrawal
rate. We conclude that, as is so often the case when all-stars are
compared, there
is no clear winner when it comes to DFA versus Vanguard. The right
answer depends
on the specific asset class or tilt being discussed.

Another product and strategy note looks at the continuing tracking
error problem
at some exchange traded funds. In this case, TIP and AGG have
significantly
underperformed comparable Vanguard index mutual funds so far this year.
At a
reader's suggestion, our last note examines the Hussman Strategic
Growth Fund
(HSGFX). We find that its strategy resembles that of an equity market
neutral
hedge fund, and that it is very reasonably priced. We conclude that,
like the
PIMCO All Asset Fund (PASDX), whose strategy is similar to that used by
global
macro hedge funds, HSGFX is a reasonable option for an investor who
wishes to
mimic the institutional strategy of combining index funds with hedge
funds.

As always, if you have any questions about anything we have written,
please
don't hesitate to email them to us.

[http://www.indexinvestor.com]


__________________

__________________
ER for 10 years; living off 4.3% of savings (and a few book royalties ;-)
ESRBob is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Re: Great DFA vs Vanguard Analysis in Index Invest
Old 12-08-2004, 12:16 PM   #2
Moderator Emeritus
Nords's Avatar
 
Join Date: Dec 2002
Location: Oahu
Posts: 26,319
Re: Great DFA vs Vanguard Analysis in Index Invest

Speaking of GLD, I notice that today's trading bashed it down below its initial offering price.

http://stockcharts.com/def/servlet/SC.web?c=GLD,uu[m,a]daclyyay[da][pb50!b200][vc60][iUb14!La12,26,9]&pref=G

'Scuse me while I find a nice comfortable viewpoint on the sidelines...
__________________

__________________
*
*

The book written on E-R.org, "The Military Guide to Financial Independence and Retirement", on sale now! For more info see "About Me" in my profile.
I don't spend much time here anymore, so please send me a PM. Thanks.
Nords is offline   Reply With Quote
Re: Great DFA vs Vanguard Analysis in Index Invest
Old 12-10-2004, 07:03 PM   #3
Recycles dryer sheets
 
Join Date: Nov 2002
Posts: 373
Re: Great DFA vs Vanguard Analysis in Index Invest

There was a recent article on GLD, referenced here in Investment Strategies / Re: "Pieces Of Eight, Pieces Of Eight", about the lack of audit controls and the inability to verify gold actually held. Sounded scary - and the author wondered why the SEC approved it when in violation of SEC guidelines. The sideline is a good place to be on this one I think.
__________________
wzd is offline   Reply With Quote
Reply

Tags
vanguard


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Vanguard Changing Target Index of 098 ag4gt Other topics 0 05-12-2005 06:39 AM
Vanguard Pacific Stock Index Fund Craig FIRE and Money 7 04-05-2005 08:17 PM
Vanguard vs DFA AlanS FIRE and Money 3 01-29-2004 04:43 PM
S&P 500 Asset Class question Cut-Throat FIRE and Money 1 12-30-2003 07:54 AM
Vanguard Index Funds Moving From S&P To MSCI BigMoneyJim Other topics 5 05-18-2003 03:21 AM

 

 
All times are GMT -6. The time now is 10:11 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2014, vBulletin Solutions, Inc.

Early Retirement News right to your Email!

Stay up-to-date with all the latest news to your inbox!

unsusbcribe at anytime with one click

Close [X]