Fundamental versus traditional indexation for international mutual funds: Evaluating dfa, wisdomtree, and rafi powershares

Journal Article (Chapter)

Do fundamental index funds beat traditional ones? The major companies that offer the new fundamentally indexed international mutual funds are Dimensional Fund Advisors (DFA), Research Affiliates, and WisdomTree. A major provider of traditional international index funds is DFA. We compare various fundamental international index fund portfolios from these providers with individualized benchmark portfolios composed of DFA traditional international funds. For each family we provide 16 measures of how much an aggregate of its fundamental indexes outreturned its corresponding DFA traditional benchmark portfolio through June 2014. Taking averages, (1) the Research Affiliates PowerShare aggregate out-returned its corresponding DFA traditional benchmark portfolio by 1.08?%/year, (2) the DFA fundamental aggregate under-returned by 0.30?%/year, and (3) the WisdomTree aggregate under-returned by 0.74?%/year. One cheer for fundamental international indexation and two for traditional indexation.

Full Text

Duke Authors

Cited Authors

  • Lim, H; Tower, E

Published Date

  • January 1, 2016

Start / End Page

  • 331 - 353

Digital Object Identifier (DOI)

  • 10.1007/978-3-319-33976-4_15

Citation Source

  • Scopus