Case ID: 203026
Solution ID: 4037
Words: 1407
Price $ 45

Dimensional Fund Advisors 2002 Case Solution

Case Solution

Dimensional Fund Advisors (DFA) bases their strategy on the concept stock marketplaces are efficient. The implication they tap into their assumption of market efficiency is the fact that an energetic portfolio management strategy cannot bear superior returns. Therefore, they manage their investment portfolios passively. However, they are doing have confidence in the significance of seem academic research and it is value in choosing appropriate stocks. They feel that diversification remains an essential consideration in passively handled investment portfolios. Likewise, additionally they think that skilled traders can produce a significant contribution even if the opportunities are passively handled. Traders could make an effect by making certain low turnover, and occasional transaction costs when controlling the investment portfolios. DFA even incentivize academics to operate on relevant subjects (for example buying and selling methods) by providing them a share of profits acquired based on their findings.

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Questions Covered

Describe the philosophy and business strategy of DFA. What sort of market behavior are they counting on?

Do they add value for investors?

Do the DFA people really believe in efficient markets?

What should be the firm's strategy going forward?