Dimensional Fund Advisors Case
Submitted by zgirma on March 11, 2011
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Dimensional Fund Advisors Case
Dimensional Fund Advisors Case
1. Describe the investment strategy employed by DFA. Does DFA consider itself an active or passive manager? What aspects of its strategy are active? What aspects are passive?
DFA’s investment strategy was centered on academic research, specifically on the findings of Banz’ “size effect†and Fama and French’s “book-to-market effect.†In Banz’ research, he found that small stocks consistently outperformed large stocks over the entire history of the stock market from 1926 through the late 1970s. See Exhibit 1 for overview of growth between large and small cap stocks.
In the Fama & French...
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