Camber's investment philosphy aligns with Dimensional Fund Advisors
(Originally posted in 2020)
With countless investment products available we wanted to highlight why we predominantly use Dimensional Funds. Camber is open architecture and independent. This means that we are free to invest our clients’ money in whatever structures we believe have the highest probability of long-term success. We are not compensated by fund companies or products; instead, we are paid directly by clients— avoiding a conflict of interest.
Camber’s investment philosophy allows us to quickly dismiss the use of most traditional funds because of high costs, excessive trading, and lack of evidence to support their investment strategy.
Our philosophy does align with the use of traditional index funds and exchange-traded funds (ETFs) offered by companies like Vanguard (a company we admire). However, we believe that dimensional fund advisors offer compelling enhancements and advantages to investors.
Dimensional was founded on a philosophy of applying academic rigor to investment management. Titans of the academic community, including Nobel Laureate Eugene Fama, Kenneth French, Nobel Laureate Robert C. Merton, and Nobel Laureate Myron Scholes, work directly with Dimensional. In an industry marred in dark practices and blurred motives, Dimensional’s brand is a beacon of hope.
It starts with ideas, but results come from execution. Dimensional was founded in 1981. The firm has a thirty-nine-year history proving their ability to execute and be a market leader in cost effective implementation.
Dimensional has assets in excess of $800 billion; two times that of Canadian Pension Plan (CPP). The size of Dimensional means that small-firm risk is removed from the equation. In market downturns and times of extreme volatility, this fact provides comfort.
Dimensional recognizes that markets are largely efficient and that trying to pick winning stocks is futile. However, they are not tied to replicating a specific benchmark. Traditional index funds value proposition comes from their ability to accurately match a benchmark. This objective restricts their flexibility and portfolio engineering.
Dimensional offers funds with low annual expense ratios that are much lower than the industry average.
Small cap and value tilting
Informed by evidence and thorough academic evidence, Dimensional funds are intelligently designed to capture greater expected returns by tilting their portfolios.
Mutual fund managers have the option to lend their stock positions to short sellers and receive a lending fee in return. Dimensional passes all of their net lending fees to you, the fund holder, which is not industry standard.
Single line statements
We are huge proponents of Dimensional’ s global market portfolios that offer clients a single line on their statement while providing exposure to over ten thousand companies and twenty-five countries. Added benefits are:
– Simple and transparent performance reporting
– Automatic rebalancing
– Daily liquidity
– Currency management and tax loss harvesting occur at the fund level where it can be done most cost effectively.
Dimensional funds are based in Canada, while offering exposure to the US and International markets. This mechanism avoids the need for clients to report foreign holdings on their tax returns.
Dimensional does not market its investment products directly to individual investors. Its funds can be purchased by vetted advisors who have demonstrated expertise in the implementation of evidence- based investment strategies.
As a final reminder, our loyalty is to our clients. We are actively exploring the market for alternatives to Dimensional, and if we believe that a different company offers a better option, we would unemotionally make a change. As of this writing, we are proud to invest in Dimensional funds both for our client and our own accounts.