I have been reading a lot of things online recently, where people have been comparing Vanguard with Dimensional Fund Advisors, iShares and BlackRock index funds.
This article will compare all of these options. If you prefer video content, the content below summarizes the article:
Firstly, who are Dimensional Fund Advisors and Vanguard?
Many people know who Vanguard is. They are one of the biggest financial services groups in the world, with $5.6trillion USD assets under management as of 2019.
Founded by the late Jack Bogle in 1975, they are most famous for their index funds, which track a specific index, such as the S&P500 or MSCI World. They do also offer actively-managed funds.
Less people have heard of Dimensional Fund Advisors (DFA). They are headquartered in Texas, with close to $600billion USD assets under management.
So in terms of size, Vanguard is much bigger:
Both firms focus on passive investments. The main difference is that DFA focuses more on value and small caps, and claim to use superior technology.
This is sometimes known as a “smart beta ETF” or index funds. It follows an index, so is passive, but also considers many factors in picking stocks within the index.
So unlike iShares, BlackRock and other index funds which often are almost identical to Vanguard in terms of fees and performance, there is a reasonable difference between Vanguard and DFAs.
DFA tends to charge about 0.15% more per year for the funds, as compared to Vanguard or iShares.
So what has been the performance?
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