In our fourth and final installment in our investment update series, we will be reviewing our fifth investment principle and the changes we have made to LifeGuide InSight’s Enhanced Index Portfolios. If you enjoy golfing, especially GOLFING FOR FREE, you won’t want to miss the last paragraph below!
Our 5th investment principle is “Keep expenses low but focus on value.” Our InSight Enhanced Index portfolios embody this principle through the utilization of low cost, broadly diversified, index funds. In brief, the philosophy behind investing through passive index funds is that consistently choosing individual stocks that will produce a greater return than the stock market (US Stocks, International Stocks, etc.) is a difficult task. The hurdle becomes even higher after considering the fees and taxes involved with active management.
In the past, our implementation of index investing has been through Vanguard and iShares Exchange Traded Funds (ETFs). Vanguard’s index funds, in particular, have revolutionized the industry due to their low cost and diversification. While the use of Vanguard and iShares has been superb, we have continued to investigate ways to improve our Index model, which led to the transition to Dimensional Fund Advisors (DFA) for the stock allocation. The fixed income and real estate portions of the model have remained the same.
DFA is a global investment firm that has been serving investors for more than 35 years. With several Nobel Prize-winners steering their investment philosophy, we were drawn to their deeply academic approach. Their approach to investing is closely tied to index investing, but it applies decades of research which has identified various “premiums” that have historically enhanced returns. Their strategy is typically referred to as “smart indexing”. DFA takes advantage of the identified premiums by still buying the entire market but tilting their funds to increase the exposure to the premium. For example, one of the premiums they identify is company size. Historically, smaller companies have outperformed larger companies over time. DFA seeks to capture this premium by allocating more of the fund’s resources to smaller companies than a typical index fund would. The other premiums that their stock funds utilize are value, profitability, and momentum. Their website contains a treasure trove of useful information which we encourage you to review.
We have been intrigued by DFA for several years and are excited about being able to provide you access to these funds. DFA has an application and a screening process for firms that wish to utilize their funds. We are excited to announce that after successfully working through their vetting process, LifeGuide has received access their funds.
If you have any questions, please don’t hesitate to contact us.
Each year we contribute a portion of our proceeds to The LifeGuide Impact Fund. One of the chief purposes of the LifeGuide Impact Fund is to support local ministries and organizations that are important to our clients and staff. One of the common ways that organizations raise funds is to hold golf tournaments. A benefit of sponsoring these events is that LifeGuide often receives complementary foursomes and meal vouchers. We would like to share these opportunities with LifeGuide clients and their friends. If you would like us to notify you about these free golfing opportunities, please email Leslie at firstname.lastname@example.org, and we will add you to our golfers email list. We currently have multiple opportunities available to golf at some really nice courses in May and June. More details about what is available and the process for expressing interest will be shared via the LifeGuide golfers’ email list soon.
LifeGuide Financial Advisors, LLC is a registered investment advisor. Information about funds is for general information. Nothing in this post should be considered specific investment advice. Asset allocation may vary by the client and depends on objectives and tolerance for risk. Funds, like any other type of security, may be subject to the volatility of financial markets and additional risks associated with investing in fund securities. Please see the prospectus for the mentioned funds for further information and other risk considerations. Upon request, LifeGuide will assist clients and prospective clients in obtaining fund prospectuses.