Given our disciplined, tortoise vs. hare investment strategy, it’s not often I get the opportunity to say, “I told you so.” I’m not much better off at home, where my brilliant family seems to always be one step ahead of me. Well, today’s my lucky day, based on a recent Morningstar Stewardship report card that gave Dimensional Fund Advisors an “A” grade.
In March 2014, we were bewildered when Morningstar lauded Dimensional’s “many positive traits” … but then gave it a B for corporate culture. As a former Morningstar analyst, I had some ideas on why the disconnect had occurred. You can read my analysis here. I concluded at the time that “Dimensional’s distinct approach makes it a bit of a square peg in this round methodology.”
As it turns out I may have been on to something. Morningstar’s Stewardship Grade isn’t as well known as its more popular star ratings, which focus on a fund’s past performance. Even though Morningstar itself (not to mention countless supporting analyses) emphasizes that the stars are not predictive of any future expectations, most investors are familiar with them.
A demonstrated track record for responsible money management is certainly not the only reason to consider one fund company over another. But, to us, it’s a better indicator than any stars of past performance. For this reason, we feel that Morningstar’s Stewardship Grade report, “DFA’s Disciplined Approach Earns It a Top Mark,” is worth reading. Check it out for yourself.