Arnold Schwarzenegger owns approximately 5% of Dimensional Fund Advisors, the secretive mutual fund index group in Santa Monica that is popular among index advisors and institutional investors. Ironically, while he appears to have done relatively little indexing himself, he has made quite a tidy fortune from other indexers.
He bought the stake in DFA in 1996 from brokerage firm Schroder Wertheim, where his longtime friend and financial advisor Paul Wachter was working. The firm's assets has swelled to $40 billion. While DFA is not telling much about its revenues (or its operations at all), a .5% average annual fee on that amount would reap $200 million in revenue. (Most of its funds are below 1% in fees and many are below .5%)
Schwartzenegger recently released his portfolio to the public as part of his campaign strategy to unseat California governor Gray Davis in the state's dramatic October recall vote.
Dimensional's chief executive, David Booth, recently joked that "I try to brainwash him with our view of economics." And Eugene Fama, director of research at Dimensional and a professor of finance at the University of Chicago business school where Booth picked up an MBA, was recently named one of Schwarzenegger's financial advisers.
But Schwartzenegger is clearly not a passive indexer himself. Among his action adventure investments are:
- a Boeing 747 to Singapore Airlines
- movie theaters
- Planet Hollywood restaurant chain
- an Internet software business
- major holdings in Gannett Co., IBM, International Speedways, Roto-Rooter Inc. and Weight Watchers International
- Planet Hollywood
- Ohio's Easton Town Center, a million-square-foot mall
- the Fitness Expo convention
Perhaps his most dramatic active play was a bet on himself. In one of his first blockbusters, the comedy "Twins", he decided to forgo his cash fee in exchange for 15 percent of the studio's receipts, which brought him a staggering $30 million. He went on to earn approximately $300 million from his next 13 films.
With a day job like that, who needs to index?