Inaya Mclaughlin
DFA funds are only available to institutional clients and through select fee-only advisors. However, there are some ways to invest in DFA funds without an advisor. Some employers offer DFA funds in their 401k plans, and some states offer DFA funds as part of their 529 plans. Additionally, DFA funds are now available to retail investors in the form of ETFs. Finally, Jefferson National offers access to DFA-advised subaccounts through its Monument Advisor deferred variable annuity product.
| Characteristics | Values |
|---|---|
| DFA funds available without a DFA-approved financial advisor | West Virginia Smart529 Select Plan, Utah's 529 plan UESP, California Scholar Share Program, Jefferson National annuity product |
| Cost of West Virginia Smart529 Select Plan | 0.42% on top of DFA's fund expense ratios, plus 0.05% from West Virginia |
| Cost of Utah's 529 plan UESP | 0.2% administrative fee on top of DFA's fund expense ratios |
| Cost of Jefferson National annuity product | $20/month M&E fee, $49.99 per transaction into DFA and Vanguard subaccounts |
What You'll Learn
DFA funds are available through certain employers' 401k-type plans
One such example is the West Virginia Smart529 Select Plan, which offers investment options exclusively in DFA funds. It has age-based options and 10 static portfolios at different risk levels. The program manager charges 0.42% on top of DFA's fund expense ratios, and West Virginia charges an additional 0.05%.
Another example is Utah's 529 plan, which is highly rated for its low cost and good investment options. It does not charge an extra fee for investing in DFA funds.
California's Scholar Share program is another option that offers access to DFA funds, although it is less customizable than Utah's plan.
The Monument Advisor deferred variable annuity offered by Jefferson National is another way to access DFA funds without an advisor. This annuity product offers access to six DFA-advised subaccounts with expense ratios ranging from 0.33% to 0.66%. However, it also levies a $20 monthly M&E fee and a $49.99 fee per transaction into DFA and Vanguard subaccounts.
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West Virginia's 529 plan offers DFA funds
West Virginia's 529 plan offers a way to invest in DFA funds without an advisor. The SMART529 Select plan is a direct-sold 529 college savings program that features funds from Dimensional Fund Advisors (DFA). This plan is managed by Hartford Funds and offers age-based and static portfolio options. Although DFA funds typically require a financial advisor, this 529 plan is an exception.
The SMART529 Select plan provides investment options exclusively in DFA funds, including age-based options and 10 static portfolios at different risk levels. The program manager charges 0.42% on top of DFA's fund expense ratios, and West Virginia charges an additional 0.05%. This extra cost is relatively low compared to the fees charged by an advisor with access to DFA funds.
The West Virginia SMART529 plan offers federal and state tax advantages, no initial contribution minimums, and flexible investment options. It is a great option for those looking to save for college, as it has helped families for over two decades.
It is important to note that while the SMART529 Select plan does not require West Virginia residency, the SMART529 WV Direct plan is only available to WV residents or beneficiaries. This plan primarily offers Vanguard index funds and has similar features to the SMART529 Select plan.
In addition to West Virginia, Utah's 529 plan, UESP, also offers DFA funds and is highly rated for its low cost and good investment options. It is essential to consider the fees and investment options of each plan to determine which one best suits your needs.
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Utah's 529 plan offers DFA funds
Utah's 529 plan, my529, offers a range of investment options, including funds from Dimensional Fund Advisors (DFA). DFA funds are known for their focus on "dimensional" attributes, such as the equity premium, size premium, value premium, and profitability premium. These dimensions are based on the Nobel Prize-winning work of Eugene Fama and Kenneth French, which suggests that certain factors can lead to better investment performance over the long term.
Utah's 529 plan is available to residents of any state and offers a variety of investment choices. The plan utilizes the Utah State Treasurer's fixed-income fund, Vanguard, and Dimensional mutual funds in four different age-based options and eight static portfolio options. It also offers the option to create a customised age-based and/or static portfolio.
The underlying funds for my529 include Vanguard and Dimensional mutual funds, the PIMCO Interest Income Fund account, and FDIC-insured accounts held at Sallie Mae Bank and U.S. Bank. Utah residents may also enjoy a state tax credit for contributions to the plan.
DFA funds are typically only available through DFA-approved financial advisors. However, Utah's 529 plan provides a "backdoor" way to access these funds without an advisor. The plan is highly rated for its low costs and good investment options, and it doesn't charge an extra fee for investing in DFA funds.
- DFA Global Equity Portfolio (DGEIX)
- DFA Global Allocation 60/40 Portfolio (DGSIX)
- DFA Global Allocation 25/75 Portfolio (DGTSX)
- DFA U.S. Large Cap Value Portfolio (DFLVX)
- DFA U.S. Small Cap Value Portfolio (DFSVX)
- DFA Real Estate Securities Portfolio (DFREX)
- DFA International Value Portfolio (DFIVX)
- DFA One-Year Fixed Income Portfolio (DFIHX)
These funds are institutional-class funds with lower expense ratios. For example, the net expense ratio of the DFA Global Equity Portfolio (DGEIX) is 0.31%. It's important to note that some of the funds are limited to a maximum of 25% of the account.
By choosing Utah's 529 plan, investors can access DFA funds without paying additional fees or working with a financial advisor. This makes it a cost-effective option for those interested in DFA funds.
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California's Scholar Share program offers DFA funds
California's ScholarShare 529 plan is a college savings plan for Californian residents. It is also available to residents of any other state. The program offers a range of investment options, including DFA funds, and has no enrollment, application, or account management fees.
The ScholarShare 529 plan has been recognised for its low fees, solid historical performance, and a matching grant. Investment portfolios are available to fit your life situation, risk tolerance, and savings goals. The plan offers a wide range of benefits to meet your college savings needs, including unique tax advantages and a wide range of higher education expenses and programs.
The ScholarShare 529 plan is a flexible and tax-advantaged savings plan for your child's higher education. It is also an excellent option for those who want to access DFA funds without an advisor. The plan has been helping California families save for college for over 25 years and is trusted by thousands.
The ScholarShare 529 plan offers a \$200 matching contribution when you open an account and contribute at least $25 during 2019. Californians who schedule automatic contributions of at least $25 are eligible for an additional $25 matching contribution. The plan also has no-fee features, making it an even more attractive option for those looking to save on college expenses.
In addition to the ScholarShare 529 plan, there are other ways to invest in DFA funds without an advisor. For example, some employers offer DFA funds in their 401k-type plans, and certain states' 529 plans, such as West Virginia and Utah, offer investment options exclusively in DFA funds.
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Jefferson National's Monument Advisor annuity offers DFA funds
Jefferson National's Monument Advisor annuity offers investors access to DFA funds. The annuity is described as a "flat-fee variable annuity", allowing investors to spend less on administrative and management charges, and accumulate more money in their contract.
The Monument Advisor annuity provides access to nearly 400 different investment options from over 40 fund families, including DFA funds. This vast array of funds can be an attractive feature for investors seeking to diversify their investment portfolios.
One of the key benefits of the Monument Advisor annuity is its low, flat fees. With a monthly fee as low as $20, it offers a more affordable alternative to traditional variable annuities, which often charge higher annual fees. However, it's important to note that additional fund platform fees ranging from 0.10% to 0.35% may apply, depending on the chosen investment options.
Jefferson National's Monument Advisor annuity is best suited for investors seeking higher growth potential compared to fixed annuities, those who want to diversify their investments, and those seeking lower fees. On the other hand, this annuity may not be ideal for risk-averse individuals or those who do not plan on utilising the lifetime income feature.
It's important to carefully consider your financial goals and risk tolerance before investing in any financial product, including the Jefferson National Monument Advisor annuity. While it offers unique features and benefits, it's essential to understand the potential risks and trade-offs involved.
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Frequently asked questions
The easiest way to invest in DFA funds without an advisor is to use a 529 plan. West Virginia's Smart529 Select Plan and Utah's 529 plan UESP are two highly-rated options that offer DFA funds.
You don't need millions of dollars to invest in DFA funds without an advisor. The West Virginia plan charges an extra 0.3% on top of DFA's fund expense ratios, which is much lower than what an advisor with access to DFA funds would charge.
Yes, some employers offer DFA funds in their 401k-type plans. You can also access DFA funds through certain annuities, such as the Monument Advisor deferred variable annuity offered by Jefferson National.
DFA funds are no-load (commission-free), low-cost, very diversified, and tax-efficient. They provide broader and deeper coverage of the global markets than other mutual funds and focus on "factor investing", including the market factor (beta), small-cap factor, value factor, and direct profitability factor.
