What we're looking at
This week's Number Cruncher series focuses on mutual fund families you may not have heard of, but are worth knowing about.
Our screen
First up is Dimensional Fund Advisors Canada, which offers a series of funds sold only through a select group of investment advisers. Globeinvestor.com's database tracks eight Dimensional funds, each with multiple versions. Only the most widely held versions are shown here.
To assess performance, we've presented the quartile rankings for DFA's lineup over the past one, three- and five-year periods. Quartiles divide funds in a category in four groupings - a ranking in the first and second quartiles is what you want to see as an investor. Ideally, we'd add a 10-year look, too, but Dimensional, based in Austin, Tex., hasn't been in the Canadian market long enough.
What we found
Several steady performers in this group, notably DFA Canadian Core Equity A. Its compound average annual return for the five years to Aug. 31 was 4.3 per cent, compared with 2.6 per cent on average for its peer group.
Canadians have about $2.3-billion invested in Dimensional funds, which makes them a comparatively small part of the $612-billion fund sector here. Dimensional funds are sold only through a network of about 120 advisers in Canada who have made it through the company's rigorous screening process. Investors cannot buy these funds directly. By dealing only with approved advisers, Dimensional can ensure its clientele is made up of long-term investors and not frequent traders who make it more difficult and expensive to run a fund.
Dimensional products are enhanced index funds, which is to say they use an index-tracking approach that is modified with extra emphasis on investing in smaller-size companies and value stocks, or those trading at less than their true worth. Fees are low by the standard of conventional mutual funds. If you're comparing the fees to the rock-bottom cost of exchange-traded funds, remember that Dimensional fees include advice.
The minimum investment is $10,000 per fund, but some advisers using DFA funds may have higher thresholds.