IFA Index Portfolio 5

At the heart of the equity portion of the core portfolios are three funds:

• DFA US Core Equity 2 Portfolio (DFQTX)
• DFA International Core Portfolio (DFIEX)
• DFA Emerging Markets Core Portfolio (DFCEX)

Each of these funds covers a specific market in total and is engineered to capture a small cap and value risk premium while minimizing trading costs within the fund.

The real estate component of the core portfolios is the same as the standard portfolios, the DFA Global Real Estate Securities Fund (DFGEX).

The primary advantage of the core portfolios is reduced trading costs. There are fewer trades required to establish a core portfolio, which can translate into a savings of up to $300. The mutual fund fees are essentially the same for both the core and standard portfolios.

One disadvantage of the core portfolios is reduced transparency. Specifically, for the standard portfolios it is easy to determine the contributions of individual asset classes to overall performance. For the core portfolios, the asset classes are bundled together in the core funds. Another disadvantage is the potential reduced opportunity for tax loss harvesting, based on the fact that an individual asset class fund may hit the threshold for tax loss harvesting before the core fund does.