I think the main strength of the Larry style portfolio is that it cuts tail risk. In your comparison the worst year for that DFA portfolio was 14%, while it was 20% for the TSM portfolio.stlutz wrote: ↑Wed Aug 14, 2019 10:32 pmLet's look at 2 portfolios that equalize volatility:Larry's article wrote:
For example, from inception in April 1993 through June 2019, the first passively managed fund to provide systematic exposure to the asset class, the DFA US Small Value Fund (DFSVX), returned 11.0% per annum (the Fama-French US Small Value Research Index returned 12.4% per annum), outperforming the Vanguard 500 Index Fund (VFINX) return of 9.4% per annum by 1.6 percentage points per annum.
A 60/40 Total Stock / Total Bond
A 46/54 DFA SV / Total Bond
This produced almost exactly the same return with the same volatility. Even the max drawdown which is supposed to be so much better under the later portfolio isn't.
The way you got from point A to point B was slightly different, but both have ended up in the same place.
https://www.portfoliovisualizer.com/bac ... 0&total3=0
But the Larry style portfolio uses intermediate treasury instead of total bond and international diversification for the equity portion.