The 3-Factor model has been around for awhile now and you can learn more now from this website below. Good? Bad? Neither. Just a different approach that favors small-mid and value over growth as a philosophy. Is this right? Wrong? Well, it has been a good approach for the past 6+ years but no one approach works consistently over time and that is why diversification is so important. Also, no one knows when large company and growth companies will out-perform small-mid and value, though many analysts believe we may continue to see this happen as has already started (two years after analysts thought it would) - so much for market-timing:
http://mba.tuck.dartmouth.edu/pages/faculty/ken.french/data_library.html
This website link will provide detailed information on how portfolios and fundamental indexes are designed for the DFA (Dimensional Fund Analysis) funds that are available only through advisors. The expense ratios for these types of funds are very low (like ETF's) but since you can only get them through an advisor, who may be charging you 1-1.5% per year on top of this, then it is hardly a bargain for anyone but the advisor.
Wisdom Tree is also using this approach with ETF's that you can purchase on your own. The key is to understand the asset allocation philosophy that you are following and to buy and hold to avoid the transaction costs.
An Introduction
Hi. Welcome to BourGroup and my blog. Phil
Phil Bour is a CERTIFIED FINANCIAL PLANNER(tm) professional since 2004, a Magna Cum Laude college graduate and an accounting professional for over 35+ years. I love numbers, statistics and economic history.
I am also an Enrolled Agent (EA) to represent taxpayers before the Internal Revenue Service and to prepare tax returns.
"Phil"osophy: I believe that you can manage your money on your own (not necessarily through individual stock selection but through mutual funds, ETF's and other solutions) once you receive some one-time, professional guidance. Why pay annual fees when there may be little added value? For additional information, first read the "An Introduction" label at the left. Then move on to others.
Phil Bour is a CERTIFIED FINANCIAL PLANNER(tm) professional since 2004, a Magna Cum Laude college graduate and an accounting professional for over 35+ years. I love numbers, statistics and economic history.
I am also an Enrolled Agent (EA) to represent taxpayers before the Internal Revenue Service and to prepare tax returns.
"Phil"osophy: I believe that you can manage your money on your own (not necessarily through individual stock selection but through mutual funds, ETF's and other solutions) once you receive some one-time, professional guidance. Why pay annual fees when there may be little added value? For additional information, first read the "An Introduction" label at the left. Then move on to others.