Just came across the news on reporter Jonathan Chevreau's blog here that says the US firm Index Fund Advisors has expanded into Canada at this site. Anyone interested in passive portfolio index investing based on strategic asset allocation offered by real experts should take note and visit them, for ideas and background information if nothing else. IFA offers only funds created by Dimensional Fund Advisors, the Board of which includes a veritable who's who of modern investment research - such as Eugene Fama, Kenneth French, Roger Ibbotson, Myron Scholes, Robert Merton!!! IFA Canada will work with De Thomas Financial Corp. IFA will provide the website, educational material and portfolio construction while De Thomas will deal with customers.
To start off the minimum account size (to enable proper diversification) will be CDN$150,000 (vs $100,000 in the US - hey, our dollar has gone up lately!) though later there is an intention/hope to accept clients with $25,000. As in the US it will be mandatory to use the advisor (De Thomas in Canada) with the associated 1% advisor fee on top of the MERs of the DFA funds themselves, which range from 0.25 to 0.45%. For that, clients get guidance for their risk/volatility tolerance and corresponding optimal portfolio.
Tuesday, 15 May 2007
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2 comments:
I wonder why IFA requires clients to use an advisor. Why can't a DIY investor buy an indexfolio directly from the firm?
The reason is apparently that the fund creators, Dimensional Fund Advisors, don't want to deal directly with the public. DFA started out providing their services to pension funds who have a lot more money per customer than you or me so they weren't set up as a retail operation. But the opportunity to invest in these fine funds may make up for the extra cost, which IFA maintains will still produce superior performance (they quote back-tested performance figures net of all the fees that still look pretty good.)
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