Introduction

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Enhanced Indexing

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FAQ

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Q: What is enhanced indexing?

Enhanced indexing is a form of investing that uses the fundamentals of passive investing, but then adds some additional tools with the idea that it is worth placing some emphasis on performance and not just tracking a commercial index.  See the tab on "Enhanced Indexing" for further details on how this is done.

Q: Why isn't enhanced indexing more widely known?

Enhanced indexing is a relatively recent innovation (in the last 15 to 20 years).  Just as indexing itself took time to catch on, enhanced indexing is still not a mainstream concept - though it continues to attract a larger following every year.  Most of the larger financial firms, moreover, have little interest in marketing or educating their clients about this option - it is not as lucrative for these firms as some of the other options that they can sell.  Despite these issues, there have been a number of interesting articles on enhanced indexing (as implemented by DFA) and you can read some of these articles in PDF Format in our Articles section

Q: What is the best way for me to use enhanced indexing?

Since individual needs and circumstances vary, you should request a free consultation so that you can share details of your specific goals and circumstances with us and so that we can answer this question in a manner tailored to your unique needs..

Q: What is the performance like?

Performance varies by client, fund, and strategy.  However, to get a basic idea of the performance of many of the underlying DFA enhanced index strategies that we use for clients, click here to see performance information for DFA enhanced indexing strategies. Note: clicking the above link opens up a new window (if you have a POP UP blocker, you may need to hold down the CTRL key as you click on the above link).

Q: How much does it cost to be a client?

The enhanced index funds that we utilize for clients, with a primary emphasis on the high quality funds and strategies offered by Dimensional Fund Advisors are low cost no-load funds with expense ratios much lower than most actively managed funds.  Most ETFs also have low expense ratios.  Since these are low cost, no-load funds, we charge clients a separate fee which varies based on the total amount of assets that we manage for a given client.  Unlike advisors who use loaded funds or benefit from "hidden" fees and commissions, we are a fee only advisor so we charge separately for our services based on a schedule you review and agree to upfront.  Fees are billed in arrears (not in advance) at the end of each calendar quarter - this means we provide services first and bill later.  For many of our clients, we are able to increase the investment qualify of portfolios that we supervise for them

Q: Does it make sense to pay fees to implement enhanced indexing when I could just invest in index funds like Vanguard on my own?

It depends.  If you are an investing expert or have the time to supervise your own portfolio, it could very well make sense to go solo.  For most investors, and most of our clients, however, time is in short supply and they have other priorities or little interest in becoming investment managers.  The DFA funds that we use as the foundation of our enhanced indexing approach have an excellent track record of performance and these funds may not be available to you.

In addition to access, many of our clients appreciate the peace of mind that comes with knowing they can outsource the responsibilities for their portfolio.  Due to the many psychological and emotional traps that ensnare individual investors, we can also add value by helping our clients stay disciplined and focused on the long-term.  Even within enhanced indexing, our implementation emphasizes greater utilization of value oriented approaches, which can also add some additional value for our long-term investor clients.  Finally, our fee includes wealth management services and educational resources available only to clients.  So while our solutions may not be right for everyone, you may find that net of all the fees you pay, you are better off financially and emotionally, by outsourcing the burden to a fee-only advisor like The Ridgewood Group.

Q: How does the relationship work if I want to become a client?  How do I get started?  How long-does it take?

The first step is to contact us to request a free/no-obligation consultation with one of our professionals.  We will conduct a brief interview, allow you an opportunity to ask us questions and get to know you a bit better to see if there might be a fit or not.

If you and we mutually determine (after the initial interview) that there might be a fit, we will explain the process and work with you to complete the necessary steps.  The process may include opening one or more new account(s) with a custodian of your choice (like Fidelity or TD Ameritrade).  We can manage any type of account, including individual, joint, custodial, corporate, or pension/defined benefit accounts.  Once the account is open, you can fund it by depositing cash or transferring securities from another account or bank. 

After reviewing our disclosure statement on Form ADV Part II, you will also enter into an investment management agreement with The Ridgewood Group to authorize us to manage your account(s).  Account(s) can be funded at inception or from time to time, and you can terminate the arrangement at any time with 30 days advance notice.  The custodian you select will send you monthly statements for each of your accounts, and you can also request online access.  Depending on your specific circumstances, it takes from a few days to a few weeks to get the paperwork signed and processed.  Once set up, we will manage your accounts and you will start to receive statements and have online access to follow the account whenever you would like to do so.

 

     

Contact Us: email: info@indexvalue.com   Tel: 973-544-6970  Fax: 973-544-4026
IndexValue.com is a service of The Ridgewood Group 51 JFK Parkway, 1st Floor West, Short Hills, NJ 07078