Benjamin Felix

If an index did this, they'd have massive tracking error to the index.

I mean, there wouldn't be an index fund basically at that point.

And that tracking error would be sad.

As listeners know, I'm a huge fan of index funds.

But as listeners also know, we don't use them.

The assets that I oversee at PWL, we use dimensional funds rather than index funds.

I personally don't invest in market cap weighted index funds.

And this is, I mean, there are a bunch of reasons for that, but this is one of them.

Dimensional waits six to 12 months after a company lists before considering including it in their portfolios.

Dimensional also intentionally tilts away from what I call the junk earlier that IPOs tend to behave like more generally.

PWL uses dimensional funds, but they are not paying us to say this.

I gain nothing from people using dimensional products.

They have ETFs in the US and their competitor, Advantis, which I'll talk about in a second, has products in Canada.

So I mean, this is not intended to be like a sales pitch.

It's just, there's a company doing this a different way.

So that's dimensional.

They wait six to 12 months to include IPOs.

It's more complicated than that because they also tilt toward smaller and lower price companies, which have in many cases, and particularly in the US, underperformed

So even if we can say, well, hey, Dimensional didn't pay the IPO inefficiency cost in the US market, at least they did underperform because they tilted away from the large stocks that did really well over the last 20 years.

Anyway, it's complicated.