Investors who place their trust in an investment professional face numerous worries. “Style creep” is one of them. If an investor buys a real estate fund are they going to be happy if they find Google as a top holding?

Troubling this may be but more so we believe is “philosophy creep” or as one of our colleagues calls it a “tiger changing its stripes.”

At Apollo we are big believers in philosophy. We seek a philosophical match in all aspects of our business from the clients with whom we work to the investment managers with whom we feel comfortable entrusting our money. It’s one of the reasons we are longtime fans of such shops as Third Avenue Management and Tweedy, Browne.

One firm for which we have no love is Dimensional Fund Advisors (“DFA”). We find their approach restricting and overly academic.

For those unfamiliar with the firm DFA bases their strategies upon Modern Portfolio Theory (“MPT”) and the research of Fama and French. Their belief is that “markets work”, small-cap value outperforms over time and indexing is the path to success. Sounds good, right?

Where DFA falls down is they believe in MPT so blindly they refuse to acknowledge its limitations. They require all advisory firms seeking to work with them to use DFA funds and only DFA funds, to index and only to index and to believe that all markets are perfectly rational.

That’s all well and good. Some folks like chocolate – others prefer vanilla. Don’t like chocolate? Fine, we won’t try to convince you on the benefits of chocolate. Have your vanilla. You’re free to have whatever kind of ice cream you’d like…but we don’t want to hear you espousing the benefits of chocolate to someone else. Be consistent in your message.

According to the SEC a filing has been made seeking permission for a DFA-branded commodities strategy fund. For years proponents of commodities touted their diversification benefits and inflation protection. DFA in the meantime maintained an agnostic view.

As a result we’d expect DFA to remain on the sidelines. Instead they’ve watched investors pour over $60 billion into commodity ETFs and mutual funds from Jan 2008 – July 2010 while pulling over $50 billion from US-based stock ETFs and mutual funds.

Morningstar recently interviewed principals at DFA who acknowledged their commodity fund has little to do with research supporting exposure to commodities. Instead their fund launch is a response to client demand.

Enter “philosophy creep.” To be more accurate DFA isn’t abandoning their philosophy as much as they’re ignoring it in order to give clients what they want. Is that what a fiduciary is supposed to do? Do we give clients what they want or do we give clients what we believe is “right” and “best?”