DTMEX - DFA Tax-Managed US Equity

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DFA Tax-Managed US Equity (DTMEX)
Expense Ratio: 0.22%
Expected Lifetime Fees: $7,107.65

The DFA Tax-Managed US Equity fund (DTMEX) is a Large Blend fund started on 09/25/2001 and has $1.40 billion in assets under management. The current manager has been running DFA Tax-Managed US Equity since 03/23/2012. The fund is rated by Morningstar. This fund does not charge 12b-1 fees.

MarketRiders Prefers The Following ETF

Vanguard Large Cap ETF (VV)
Expense Ratio: 0.10%
Expected Lifetime Fees: $3,271.86

The Vanguard Large Cap ETF (VV) is an Exchange Traded Fund. It is a "basket" of securities that index the Large Blend investment strategy and is an alternative to a Large Blend mutual fund. Fees are very low compared to a comparable mutual fund like DFA Tax-Managed US Equity because computers automatically manage the stocks.

The Following Large Blend Funds Have Lower Fees Than DFA Tax-Managed US Equity (DTMEX). Why are these metrics important?
Mutual Fund Name Ticker Symbol Turnover Assets (M) Annual Fees
American Beacon S&P 500 Idx Instl AASPX 15.0% 467 0.16%
BlackRock Index Equity Instl PNIEX 6.0% 521 0.18%
BlackRock S&P 500 Stock WFSPX 9.0% 321 0.18%
Bridgeway Blue Chip 35 Index BRLIX 19.0% 275 0.15%
Columbia Large Cap Index Z NINDX 6.0% 2,300 0.17%
DFA US Core Equity 1 I DFEOX 5.0% 4,300 0.20%
DFA US Large Company DFUSX 4.0% 3,800 0.10%
Dreyfus Basic S&P 500 Stock Index DSPIX 2.1% 1,200 0.20%
Fidelity Spartan 500 Index Advtg FUSVX 5.0% 44,000 0.06%
Fidelity Spartan 500 Index Inv FUSEX 5.0% 44,000 0.10%
Fidelity Spartan Total Market Index Inv FSTMX 17.0% 12,200 0.10%
Fidelity Spartan Total Mkt Idx Advtg FSTVX 17.0% 12,200 0.07%
Fifth Third Equity Index Instl KNIEX 2.0% 340 0.20%
JPMorgan Equity Index Select HLEIX 7.0% 1,700 0.20%
Northern Stock Index NOSIX 2.7% 3,100 0.10%
Schwab S&P 500 Index SWPPX 3.0% 11,700 0.09%
Schwab Total Stock Market Index SWTSX 1.0% 1,900 0.09%
SSgA S&P 500 Index Instl SVSPX 2.0% 1,100 0.18%
TIAA-CREF Equity Index Instl TIEIX 11.0% 3,600 0.07%
TIAA-CREF S&P 500 Index Instl TISPX 14.0% 1,400 0.07%
TIAA-CREF Social Choice Eq Instl TISCX 19.0% 1,200 0.19%
Vanguard 500 Index Investor VFINX 4.0% 107,600 0.17%
Vanguard 500 Index Signal VIFSX 4.0% 107,600 0.05%
Vanguard Institutional Index Instl VINIX 5.0% 104,800 0.04%
Vanguard Institutional Index Instl Pl VIIIX 5.0% 104,800 0.02%
Vanguard Instl Ttl Stk Mkt Idx Instl VITNX 12.0% 19,400 0.05%
Vanguard Large Cap Index Instl VLISX 7.0% 5,500 0.08%
Vanguard Large Cap Index Signal VLCSX 7.0% 5,500 0.10%
Vanguard Russell 1000 Index Instl VRNIX 20.0% 355 0.08%
Vanguard Russell 3000 Index Instl VRTTX 32.0% 130 0.09%
Vanguard Tax-Managed Capital App Adm VTCLX 2.0% 3,800 0.12%
Vanguard Tax-Managed Growth & Inc Adm VTGLX 6.0% 2,400 0.12%
Vanguard Total Stock Market Idx Instl VITSX 5.0% 181,800 0.05%
Vanguard Total Stock Mkt Idx Inv VTSMX 5.0% 181,800 0.18%
Vanguard Total Stock Mkt Idx Signal VTSSX 5.0% 181,800 0.06%

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Why Are These Metrics Important?

Turnover represents how much of a mutual fund's holdings are changed over the course of a year through buying and selling. Active mutual funds have an average turnover rate of about 85%, meaning that funds are turning over nearly all of their holdings every year. A high turnover means you could make lower returns because: 1) buying and selling stocks costs money through commissions and spreads and 2) the fund will distribute yearly capital gains which increases your taxes. Look for funds with turnover rates below 50%. For comparison, ETF turnover rates average around 10% or lower.

Generally, smaller funds do better than larger ones. The more assets in a mutual fund, the lower the chance that it will beat its index. Managers outperform an index by choosing stocks that are undervalued. In order to find these undervalued stocks, the manager has to know more than his competitors to develop an "edge." There are only a finite number of stocks a mutual fund manager can reasonably analyze and actively track to gain such a competitive edge. When the fund has more assets, the manager must analyze large companies because he needs to take larger positions. Large companies are more efficiently priced in the market and it becomes increasingly difficult to get an edge.