Managing the Assets in a Special Needs Trust: Dimensional Fund Advisors
Dimensional is one of the largest independently owned institutional investment management firms in the world. When establishing a special needs trust for a child or loved one who is on the autism spectrum, it is important to pay attention to how the assets in the trust will be managed.
Dimensional Fund Advisors was rated the #1 mutual fund family by Barron’s and Lipper this year and they have stringent principles and beliefs that set them apart from the rest. Here are several reasons you should be choosing Dimensional Funds to manage the assets in your special needs trust.
1. They have a clearly defined approach. Their investment approach is rational, structured and simple to monitor. Their goal is to keep everything transparent.
2. Distinct Investment Strategies. Dimensional does not actively pick stocks or passively track commercial indexes but instead structures portfolios based on risk and returns as identified through financial science. Their main objective is to help clients structure globally diversified portfolios and to increase returns through state-of-the-art portfolio design and trading.
3. Scientific Research as Basis for their Investment Philosophy. Research by Professors Eugene Fama and Kenneth French identified equity market exposure, capitalization, and price relative to fundamentals as the 3 factors that primarily determine the returns of a broadly diversified portfolio. Their work has held up through rigorous open review and Dimensional strategies focus on their insight.
4. Combination of Theory and Practice. By acting as a conduit between financial economists and practicing investors, Dimensional has pioneered many strategies and consulting technologies now taken for granted in the industry. This makes for an exchange of ideas that allows Dimensional to position themselves at the forefront of innovative solutions.
5. Focus on Investing with Virtually no Style Drift. Dimensional believes that, over time, a well-structured investment approach will add value with a higher reliability and confidence level that one based on instinct and prediction. They adhere strictly to their asset class definitions. Portfolio managers are allowed to buy only those stocks that meet the defined requirements, and they have no financial incentive to deviate from this practice.
6. Low Costs. Their investment management fees are positioned well below those of traditional active managers. Their buy-hold approach and trading strategies are designed to minimize costs. Careful trading can reduce or even reverse the costs borne by traditional managers. Because Dimensional focuses on capturing the systematic performance of broad market dimensions rather than the random fluctuations of individual securities, they can keep costs low.
7. Broad Line of Complementary Strategies to Meet Your Ever-Changing Needs. Dimensional funds will allow you to gain exposure to asset classes around the world. Their goal is to provide investors with global investment solutions. They are also one of the largest providers of tax-managed mutual funds in the US. On top of that they have a unique approach to fixed income. Their approach seeks to maximize returns by using the information in the current yield curve to find the optimal maturity range instead of using interest rate forecasts or simple fixed maturity index schemes.
In conclusion,
- A clearly defined approach
- Distinct Investment Strategies
- Scientific Research
- Combining Theory and Practice
- Focusing on Investing
- Low Costs
- Complementary Strategies
is what separates Dimensional Fund Advisors from the rest of the pack. Remember, the decision to create a special needs trust can provide piece of mind regarding the future of any special needs individual. Dimensional Funds can be an excellent resource for a special needs trust, especially for parents with autistic children who are building a long-term plan and want to ensure their child will be cared for as an adult or in the event of a parent or guardian’s untimely death.
About Charles Massimo
Recognized as industry expert and guest speaker at national industry conferences, Charles Massimo is a published author and media subject expert on topics ranging from wealth/asset management to investment and financial planning for high net worth families, families with autistic children and closely-held businesses.