“It could be the perfect time to ditch the risk of active investment management altogether and reach for an index fund.”
One mutual fund company rose to the top of nearly 700 companies nationwide last year. For Highland clients, the company’s name is a familiar one. For most other investors, it is one of the largest mutual fund complexes nobody has heard of. In 2010, Barron’s rated Dimensional Fund Advisors (DFA) the #1 mutual fund company in the US. DFA, based in Austin, Texas, oversees more than $200 billion in assets and offers access to its funds exclusively to fee only advisors who share its investment philosophy. The philosophy we share is 1) diversify globally, 2) keep costs low, and 3) stay fully invested in an asset allocation consistent with the client’s objectives and risk tolerance in order to take best advantage of the performance of the market.
We are fortunate to be one of a handful of firms in Wisconsin (there are fewer than 10)to be able to offer DFA funds to our clients, as we have since the founding of our firm nearly five years ago. While DFA funds play an important role in our model portfolios, we use funds from a variety of other fund companies and ETF providers to round out the allocation.
How else does Highland, and ultimately our clients, benefit from our relationship with DFA? DFA provides us with outstanding portfolio analysis and financial planning software, data, and learning opportunities (webinars, conferences, academic research papers), as well as access to their capable staff of investment professionals. Full disclosure: no financial relationship exists between our two firms; we do not pay DFA, nor does DFA pay us anything. These resources have made us more knowledgeable investment advisors, which in turn makes our clients’ portfolios stronger.
What was the key to a successful investing experience in 2010? According to David Booth, CEO and co-founder of DFA, “What was important last year  was to stay fully invested. We take diversification very seriously. We tend to be more global than other fund families.” Booth went on to say, “it could be the perfect time to ditch the risk of active investment management altogether and reach for an index fund.” In our view, these principles will be key to a successful investing experience going forward.
Would you like to learn more about our portfolio management capabilities? Call us for a complimentary review of your current portfolio.
Ken Karr, CFP and Adam Drake, CFA are partners at Highland Investment Advisors, LLC, a registered investment advisor (RIA) providing investment management and financial planning since 2006. Based in Milwaukee, WI, the firm serves clients in eight states and manages investments for individuals, retirement plans, not-for-profits, and independent investment advisors. They can be reached at 414-755-2309 or firstname.lastname@example.org
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