Blog

Brad Rempe, CFP®, AIF®

Back in June, Seth wrote a blog noting Dimensional’s receipt of the top Stewardship Grade from Morningstar.  I’m giving Seth’s piece a little spike here…and if you haven’t yet read the written rating on Dimensional, I would recommend it (you can do so by clicking here).  It is a good overview into what makes DFA different.  Their tie to the academic community and resulting intelligent design and execution of fund offerings is extremely compelling.

In addition to the write-up of the Grade, I also thought the purpose behind Morningstar’s “Stewardship Grade” was worth passing along.  Following is what Morningstar says:

“The Morningstar Stewardship Grade™ for mutual fund firms is designed to help investors further research, identify, and compare fund companies that do a good job – or a poor job – of aligning their interests with those of fund shareholders.

The Stewardship Grade goes beyond the usual analysis of strategy, risk, and return.  It helps investors to assess funds based on the degree to which the funds’ parent – the management company offering the fund – has its’ interests aligned with those of fund shareholders.  The methodology also examines whether shareholders can expect their interests to be protected from potentially conflicting interests of the management company.

The Stewardship Grade tries to capture some of the intangibles associated with making an investment decision.  While the grades are not intended to serve as buy/sell signals in isolation, when combined with other Morningstar analyst commentary – such as an assessment of a fund’s strategy and management – they can help determine the difference between a great investment and one to avoid.”

This defined purpose and grade received by DFA should give DFA fund holders confidence that not only are their funds designed and implemented with Nobel prizewinning thought behind them, but also with their best interests in mind.  I know it does for me.


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