One of Sensenig Capital’s strategic partners, Dimensional Fund Advisors (DFA), was recently featured in a Barron’s cover article highlighting the firm’s methodology and approach to building mutual funds that are based on rigorous academic research and years of practical application. Below is an excerpt from the Barron’s article:
Dimensional Fund Advisors eschews stock-picking completely, and yet manages to beat the market consistently.
Dimensional Fund Advisors is unusual. Its fans are true believers, bordering on evangelical, yet it is hardly a household name like other fund firms of its size. (About 85% of DFA’s assets are in mutual funds, making it the eighth-largest fund family, sandwiched between JPMorgan and Oppenheimer Funds.) That relative anonymity is by design: The firm doesn’t advertise; it sells its funds only through advisors who have undergone a rigorous screening; it doesn’t sell its funds on most brokerage platforms; and it’s privately held. Because its funds are essentially quantitative — driven by computer models, rather than by individual security selection — there are no star managers. Though it doesn’t eschew the press, it’s careful to work only with reporters who “get” what it does; this was the first time a reporter had been invited to the College.
And yet its overall performance is headline-worthy. More than 75% of its funds have beaten their category benchmarks over the past 15 years, and 80% over five years, according to Morningstar — remarkable for what some investors wrongly dismiss as index investing. Its process is simple and repeatable — and yet no other firm has tried emulating it. When asked why, co-founder, chairman, and co-CEO David Booth, 67, draws a surprising analogy to Star Wars, and Luke Skywalker’s inability to harness the power of the Force until his devotion was deep and unwavering. “We are believers down to our toes,” Booth says.