Dimensional Fund Advisors is a largeasset management firmbased in Austin, Texas, with a network of hundreds of advisors located throughout the world. The firm has hundreds of billions of dollars in client assets under management (AUM), and its client base consists of mostly institutional clients and clients of other independent financial advisors. The firm does havesome individual clients on a separate account basis. Investmentadvisory servicesare the primary focus of this firm, as it does not have any financial planning offerings.
Dimensional Fund AdvisorsBackground
Dimensional Fund Advisors was founded in 1981 by executive chairman David Booth. The firm acts as the investment advisor to five separate investment companies that represent over 130 distinct investment funds, which are collectively called the U.S. Dimensional Funds. The firm is owned by Dimensional Holdings, LLC, which is in turn owned by Booth.
The firm's offices are scattered throughout North America, Europe, Asia and Australia. Its U.S. branches can be found in Santa Monica, California; Austin, Texas; and Charlotte, North Carolina.
Dimensional Fund AdvisorsClient Types and Minimum Account Size
Dimensional Fund Advisorsworks with three types of clients: institutions, clients of other independent financial advisors and high-net-worth individuals.Institutional clients are the most common, as they include investment companies,pooled investment vehicles, retirement plans, charities, government entities, insurance companies, sovereignwealth funds and businesses. The firm only works with a handful of individuals.
Certain accounts at Dimensional may have minimums, but these requirements tend to be negotiable.
Services Offered byDimensional Fund Advisors
First and foremost, Dimensional Fund Advisors is an investment manager. The firm's investment services are typically limited to the management of equity of fixed-income securities on a long-term basis. Whileits focus is on the management of investment funds, it oversees someseparately managed accounts (SMAs)for individualsas well.
Another aspect of Dimensional's business is the licensing of software programs to defined contribution benefit retirement plans. This software helps these plans organize their participants and put them into model portfolio groups, all while providing technical support and maintenance.
Dimensional has created a number of retirement-focused indexes that it then licenses out to unaffiliated independent financial advisors. The firm's Index Committee continually maintainsthese indexes.
Dimensional Fund AdvisorsInvestment Philosophy
Dimensional Fund Advisors describes itself as having a single investment philosophy that spans all of its strategies. More specifically, this involves taking a long-term approach to investing, while relying on expected returns instead of market-timing, short-term trading, stock-picking or interest rate forecasting. The firm's investments tend to be within the groups of equities or fixed-income securities.
Advisors at Dimensional primarily utilizefundamental methods of analysis to evaluate securities, though they may sometimes also usetechnical analysis.When applicable, the firm uses securities analysis asa means of eliminating investments from portfolios rather than adding them. The firm continually reviews its strategies to ensure that their intended goalsare still being met.
Fees UnderDimensional Fund Advisors
Advisory fees for separate account services at Dimensional Fund Advisorsare generally negotiable, meaning fee rates will vary based on different factors. Fees are typicallycharged as a percentage of each client's total AUM, and they are usually billed quarterly, in arrears.
| Dimensional Fund Advisors Fee Schedule | |
| General Investment Strategy | Annual Fee |
| U.S. Equity | 0.06% - 0.60% |
| Non-U.S./Global Equity | 0.12% - 0.65% |
| Fixed-Income | 0.05% - 0.25% |
| Real Estate Securities | 0.10% - 0.24% |
What to Watch Out For
Dimensional Fund Advisorshas nodisclosures listed on its SEC-filedForm ADV.
The fact that Dimensional Fund Advisors sometimes charges clients performance-based fees presents a potential conflict of interest. This is because advisors who managethese accounts may have an incentive to invest in riskier or more speculative securities, which wouldn't exist under a non-performance-based fee arrangement. Despite this, the firm is bound by fiduciary dutyto act in clients' best interests.
It's also worth noting that Dimensional does not offer financial planning services. So if you're looking for financial planning offerings,including tax planning or retirement planning,useSmartAsset's free toolto get paired with suitable advisors in your area.
Opening an Account WithDimensional Fund Advisors
If you're interested in learning more about Dimensional Fund Advisors services and investment funds, call the firm at (512) 306-7400. To find an advisor that uses Dimensional's services, visit the firm's website and enter your zip code.
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