• Rob Schmansky

Benefits of Including Flexibility

This article originally appeared at Forbes by Robert Schmansky, CFP®.

Following a rigid ideology can present weaknesses in life and an investment plan.

The more experience I have as an advisor the more I realize that rigid models, rules of thumb and hard beliefs often benefit from a little flexibility.

While indexing is a great way to invest in the markets, is a straight market-cap weighted commercial index fund the best tool to use in assembling a portfolio? Or can we benefit from flexibility?

One of the reasons I recommend Dimensional Fund Advisors (DFA) funds for many asset classes is their inclusion of some flexibility in managing the tilt and inclusion of investments in an otherwise passive portfolio.

It’s always good to review whether or not that approach is actually working. As a regular review recently, I ran performance for a handful of funds that are as close to the same specific part of the markets that can be compared between Vanguard and DFA with some sort of performance history, and compared the final market value of a $100,000 investment at the beginning of the period.

CFP Detroit Ann Arbor Novi Livonia Retirement Advisor DFA Dimensional young professionals

I also compared the history of global real estate and inflation protected securities, both of which the history was not long enough to form any real judgment as to which approach is clearly better than the next, however, in both the DFA funds outperformed by a small margin.

While the above numbers cover a relatively short-time period, I believe one of the reasons for the outperformance in funds over a similar category is the flexible model that allows for some level of human involvement. Whether it is simply the weighting and tilt of the stock selections, or the ability to exclude or underweight stocks from companies that have not proven their long-term investment quality like IPOs or troubled companies like Enron or GM in the last decade, the benefits of flexibility shouldn’t be ignored or minimized.

#dimensionalfundadvisorsdfa #gpsinvesting #retirementinvesting #investing

7 views0 comments


Clear Financial Advisors (CFA) is a Fee-Only Detroit and Ann Arbor fiduciary financial and investment advisor with meeting locations in Ann Arbor / Whitmore Lake, Livonia, Novi, Bloomfield Hills, Troy, Royal Oak, and Franklin / Southfield / Bingham Farms, and serving clients nationally online.


Newsletter members receive:

       Free Clear Investing, Intentional 

       Investing ebook

       Monthly email newsletter


Phone  248.677.1762

Email    info@clearfinancial.net

Clear Investing Intentional Investing book Robert Schmansky livonia novi ann arbor detroit lansing cfp independent onine financial advice investment manager young professionals
  • RSS - White Circle
  • YouTube - White Circle

© Clear Financial Advisors, LLC | Locations / Contact UsDisclaimer