Back Bay Financial Group, Inc.

Company
Dimensional Fund Advisors


Philosophy

Why Fee-Only?

Fiduciary Oath

Back Bay Financial Group (BBFG) is privileged to offer clients access to Dimensional Fund Advisors, Inc. (DFA), an institutional money manager offering low-cost mutual funds that employ a unique passive-management strategy. Based on the theory of efficient markets, DFA applies the financial research insights of a prestigious group of economists, including two Nobel Prize winners, to the practical world of investing.

At the heart of the DFA philosophy is the contention that markets are efficient, and that passive investing is the surest path to the achieving higher after-tax, after-cost returns. Unlike a traditional indexing strategy, DFA does not rigidly tie its funds to commercial market indices. Instead, DFA constructs its funds using quantitative measures associated with sound academic theory. Their flexibility enables them to lower costs by engaging in fewer transactions than most index funds. This strategy is especially beneficial in the small-cap market, where low liquidity complicates indexing and DFA’s outsized presence helps it bargain for better prices. To further lower the transaction costs and increase its tax efficiency, DFA seeks to avoid the “hot money” that flows in and out of mutual funds based on quarterly returns. To accomplish this, DFA makes its funds available only through Fee-Only Wealth Management firms such as BBFG, where it can anticipate a long-term commitment.

Our Wealth Managers have been trained in the academic theories behind DFA's strategy, and they are among the few Fee-Only advisors nationwide authorized to offer these funds to our clients.

To learn more about the unique strategy that DFA employs, read any of the following articles:

 
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