Nothing like good old-fashioned educational values. You put in the work at school, you get the grade.

In this case, it's academic stalwart DFA that made it to Morningstar's honor roll of sorts, garnering a B for Stewardship.

For sure, 2013 was the year of the student, as far as DFA is concerned. It was rated as a favorite of financial advisors, while its International Small Company fund received a Morningstar Silver Rating, while its efforts in the 401(k) space have garnered media attention.

And perhaps most importantly, DFA's intellectual muse, academic Eugene Fama, was one of the recipients of the 2013 Nobel Prize for Economics.

Morningstar attributed DFA's success to low costs, strong performance, and the growing acceptance of passive strategies. David Booth's firm also got kudos for its "old-school" learning style. The Morningstar analysis said that the firm only adopts strategies that are backed by substantial empirical evidence. DFA hearts academic research, which is not only the driving force behind their investment strategies, but has served as "the primary guide of DFA's evolution throughout its history," according to Morningstar.

Apparently, this unifying academic framework helps with keeping their talent. The company has a nearly 95 percent manager-retention rate for the past five years.

  DFA now ranks among the top 10 mutual fund companies and has developed a strong corporate culture, according to Morningstar. With all the positive stuff going on, Morningstar analyst suggests that "it is necessary to monitor how the firm handles its heft and responds to new sources of demand." 

Edited by: Ning Zhou


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