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Don Phillips was the Managing Director of Morningstar when that report was issued. He summarized his findings this way: “Consider the success Dimensional Fund Advisors has had in selling its funds through advisors who undergo training on the merits of passive investing and in portfolio construction theory. Consider that over the past decade the dollar-weighted return of all index funds was just 82% of the time-weighted return investors could have gotten with those funds. Yet, the figures for Dimensional are much better. In fact, the dollarweighted returns of Dimensional funds over the past 10 years are actually higher than their time-weighted returns, suggesting advisors who use Dimensional encourage very smart behavior among their clients, even buying more out-of-favor segments of the market and riding them up, rather than buying at the peak and riding the trend down, which is usually the case with fund investors.�18 The findings of the Morningstar report are shown in Figure 1-7. Knowledgeable passive advisors help their clients stay invested and rebalance throughout market turbulence. Such behavior Figure 1-7

Index Funds: The 12-Step Recovery Program for Active Investors  

This book reveals the potential land mines and pitfalls of active investing and educates readers on the benefits of passive investing with i...

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