Morningstar, an independent mutual fund rating company, recently updated their parent ratings on mutual fund companies. The two primary mutual fund companies we use, Dimensional Fund Advisors (DFA) and Vanguard, were both given a high rating, the top rating available by Morningstar. Only five total mutual fund companies, of which more than 50 were rated, received the top rating of high.
Morningstar reviewed fund companies from several angles such as culture, long-term focus, ownership structure, manager tenure, regulatory infractions and ethical practices, and providing strategies that have served investors well.
When speaking about Vanguard, Morningstar’s Alec Lucas said “Vanguard gained its stature by following Jack Bogle’s playbook: pairing relatively predictable strategies, both passive and active, with minimal costs. That’s enriched Vanguard’s investors, and those outside its flock who have benefited from industrywide fee compression.”
Daniel Sotiroff wrote about DFA; “Dimensional Fund Advisors continues to be an outstanding steward of its shareholders’ capital. … Co-CEOs David Butler and Gerard O’Reilly oversee a strong culture focused on market efficiency and transaction cost management.
Dimensional’s investment strategies are rooted in research from the top minds in financial academia. These same researchers use a rigorous vetting process when developing new strategies or modifying existing ones. Proposals must be exploitable in a well-diversified, low-turnover, and cost-effective manner. Changes to existing strategies and the introduction of new funds are rare when they do occur.”
We couldn’t agree more with Morningstar’s assessment of both Vanguard and DFA. Level has long used mutual funds from both of these companies and will continue to do so as long as they continue to be good stewards of our clients’ investments.
Steven Elwell, CFP®
Partner, Chief Investment Officer