PT  - JOURNAL ARTICLE
AU  - Edward Tower
AU  - Chao Yang
TI  - Is Traditional Indexation Passé? <em>Vanguard Versus the Enhanced Indexers: DFA, RAFI, and WisdomTree</em>
AID  - 10.3905/jii.2013.4.1.070
DP  - 2013 May 31
TA  - The Journal of Index Investing
PG  - 70--81
VI  - 4
IP  - 1
4099  - https://pm-research.com/content/4/1/70.short
4100  - https://pm-research.com/content/4/1/70.full
AB  - Vanguard provides low-cost capitalization-weighted mutual funds: traditional index funds. The asset allocation of DFA’s core funds is determined by fundamentals as well as market cap. RAFI’s allocation depends on four fundamental factors—dividends, cash flow, sales, and book equity value. WisdomTree’s allocation is also determined by fundamentals alone. We compare returns of these enhanced index funds with corresponding Vanguard mutual fund portfolios. Focusing on U.S. funds only, DFA had lower returns than portfolios of Vanguard funds that mimicked their style; RAFI and WisdomTree out-returned Vanguard. Two cheers for enhanced indexation and one for traditional.TOPICS: Mutual fund performance, passive strategies, portfolio theory