MIB: Dave Butler, Dimensional Fund Advisors Co-CEO

This week, we speak with Dave Butler, Co-Chief Executive Officer and Head of Global Financial Advisor Services at Dimensional Fund Advisors (DFA), which manages $600 billion dollars.

Butler, was a star college basketball player for University of California, Berkeley, before being drafted by the Boston Celtics. A career ending injury when he was young sent him back to Berkeley to finish his MBA. He has been withthe firm for several decades, rising through the ranks to eventually become Dimensional’s co-CEO. He is also on the firm’s executive committee and has been involved with strategic vision and decision-making for many years.

Butler describes how DFA tapped into the intellectual firepower of academics like Merton Miller, Gene Fama, and Ken French, to create factor-based indices that performed better than plain vanilla market cap based indices. This approach has allowed DFA to generate significant outperformance versus their peers. Since 2003, Morningstar reports that only 14% of all equity and fixed income funds beat their benchmarks.* During that same 15-year period, 73% of DFA’s equity and fixed income outperformed their benchmarks.

Butler also discusses why so many professional athletes that make huge salaries end up broke or even bankrupt. The psychology of young elite athletes is that the good times will never stop — that is the frame of reference they have over their entire lifetimes. He suggests leagues like the NBA should establish trusts for individual athletes that are held until they are 25 years old.

His favorite books are referenced here; our conversation transcript will be published here this week.

You can stream/download the full conversation, including the podcast extras on iTunesBloombergOvercast, and Stitcher. Our earlier podcasts can all be found on iTunesStitcherOvercast, and Bloomberg.

Next week, we chat with John Carreyrou, two-time Pulitzer-prize winner, and author of Bad Blood: Secrets and Lies in a Silicon Valley Startup.

 

 

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* for funds that were in existence since 2003…

 

 

 

Dave Butler Favorite Books

Shoe Dog: A Memoir by the Creator of Nike by Phil Knight

Born to Run by Bruce Springsteen

A Game Plan for Life: The Power of Mentoring by John Wooden

Coach Wooden’s Pyramid of Success by John Wooden

 

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