DFA sells its funds only through financial advisers that it approves of—and whom the firm educates about indexing—and some large DFA funds haven’t surpassed plain indexes by enough to overcome the typical 1% fee that an investor pays to the adviser. Mixed resultsUnfortunately, not all DFA funds have performed as well as the original Fama-French study would have predicted, especially when considering the adviser fee. Again, the DFA fund eked out a victory of 0.26 percentage point, which isn’t enough of a margin to cover the typical adviser fee. If a fund’s investor return falls short of its overall return, many attribute it to bad trading (buying high and selling low). If DFA funds’ investor returns were better, the failure to exceed the benchmarks by the amount of the typical adviser fee could be more easily absorbed.

Source: Wall Street Journal March 06, 2017 03:10 UTC