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

Dimensional Fund Advisors 2002 Case Solution

Case Solution

Dimensional Fund Advisors (DFA) is an investment management company that takes pleasure in grounding its investment strategies and decisions based on scholastic studies and investigation. A number of the highly-appreciated and appealing finance research papers of the previous two decades (particularly those by Eugene Fama and Kenneth French, who work in close association with DFA) have shaped DFA investment plans and tactics. DFA started as a little stock fund, with hopes of benefiting from the "size effect" (overly expected performance of small equities) that had been found by various scholarly analysts. Later, DFA included "value" tactics to its bundle of offerings. After scholarly research accounted for   quality performance by value funds and stocks in a number of nations, DFA started to construct a bundle of global value stock and small stock investment funds. The firm was exceedingly effective, regardless of missing out on a major opportunity in 1990s of growth stock boom. DFA's assets that were managed developed from $8 billion to $40 billion somewhere between 1991 and 2002. With value funds having thrived in the initial two years of the new decade, DFA is now looking for added opportunities where it can offer value for stakeholders while at the same time keeping on asserting to have no unique "stock-picking" capacity.

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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?