The Dimensional Fund Advisors Versus Vanguard Battle


There’s no longer an argument that index funds beat actively managed funds. 

But there remains a battle between two types of index funds.  DFA (Dimensional Fund Advisors) claim to reign supreme. 

They tilt their portfolios towards small cap and value cap.  They also claim to have a superior way of trading.

But when comparing DFA’s funds to Vanguard’s index funds (in an apples-to-apples test) I found that Vanguard won. I first wrote about that here, testing DFA’s funds against their Vanguard equivalents. 

I’ve since updated that comparison. 

Here’s Portfolio 1, Comprising DFA’s Funds


Here’s Portfolio 2:  Vanguard’s Equivalents



Using, I compared results from January 2007 until April 30, 2018.

As you can see below, Vanguard’s Portfolio (Portfolio #2) won once again.  It averaged a compound annual return of 6.67 percent. 

In contrast, DFA’s equivalent funds managed a compound annual return of 6.63 percent. 

The race was close.  But Vanguard did win.

What’s more, Vanguard’s equivalent funds recorded a standard deviation of just 16.95%. 

Standard deviation is a measure of volatility.  The lower the better.

DFA’s equivalent was more volatile, recording a standard deviation of 18.07%.

I love DFA’s funds.  But in an apple- to-apples (factor to factor) test against their Vanguard’s equivalents, they’re a step behind their promise.


January 1, 2007 – April 30, 2018

Portfolio 1= Dimensional Fund Advisors (DFA)

Portfolio 2= Vanguard’s indexes 



internaxx special deal for andrew hallam readers

Andrew Hallam

I’m a financial columnist for Canada’s national paper, The Globe and Mail, as well as for AssetBuilder, a financial service firm based in Texas. I’m also the author of Millionaire Teacher: The Nine Rules of Wealth You Should Have Learned in School (2nd Ed. Wiley 2017) and The Global Expatriate’s Guide To Investing: From Millionaire Teacher to Millionaire Expat (Wiley 2015). My mission is to educate, motivate and inspire people on basic retirement planning and best practices for investing, using evidence-based strategies. I'm happy to comment on your questions. However, please read the Terms of Use, Privacy Policy and the Comments Policy.

You may also like...

2 Responses

  1. Mark says:


    I read your book for expatriate investing and am at a standstill regarding my investment options. I reside in the US and have a large chunk of $ sitting in a chequing account. In chapter 16, you mention avoiding US domiciled stocks and ETFs due to the estate taxes. Maybe I am not as concerned about this as I should be – I’m 32, not married, no children -because I recently opened a Vanguard US brokerage account with plans to start my investing journey. I am having second thoughts as to whether I am doing the right thing. Would I be better off looking into another account like Canadian based TD Waterhouse (I’m assuming that would not affect my residency status), an offshore account (would I benefit from this being a US resident?), or should I stick with US Vanguard. I may stay in the US long term should the opportunity allow for it. If I do stay long term, would that influence what account I should open?


  2. internaxx special deal for andrew hallam readers

Leave a Reply

For your privacy we strongly recommend you do not use your full real name. While your email address will not be published, it may reveal your photo or a recognizable image if it is associated with It is strongly suggested you do not use a corporate or ISP email address. Before your comment is published you will receive an email asking you to confirm your email address. Select "Notify me of follow-up comments via email" to receive notifications of replies and be able to adjust your subscription. Published comments will not be deleted.

By clicking "Post Comment" you confirm you have read and agree to the conditions on the Legal Page; including the Privacy Policy, the Cookie Policy, and the Comments Policy.  We reserve the right to not publish comments that do not meet guidelines.