Small Value Funds Aren’t Equal

Vanguard is clearly the leading provider of index fund products. Dimensional Fund Advisors is also the clear leader in its “space,” managing about $350 billion in assets in what we might call structured asset class portfolios. (Full disclosure: My firm Buckingham recommends Dimensional and Bridgeway funds in constructing client portfolios.)

They are both leaders because they offer low-cost, tax-efficient versions of their products. What’s important to understand is that even when they each offer a fund in the same asset class, and each fund is “passively” managed, their funds can be different in risk and expected returns. To demonstrate this point, let’s look under the hood of the Vanguard Small Cap Value Index Fund (VBR | A-100) and Dimensional’s Small Cap Value Fund (DFSVX).

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