Dimensional Fund Advisors, 2002 HBS Case

Running head: DIMENSIONAL FUND ADVISORS, 2002 HBS CASE
Dimensional Fund Advisors, 2002 HBS Case
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DIMENSIONAL FUND ADVISORS, 2002 HBS CASE
1
Table of Contents
1. Indicating whether DFA add value for its investors:.............................................................2
2.a Evaluating their marketing strategy:....................................................................................2
3.a Indicating whether replication of Ken French website is conducted:..................................3
3.b Indicating whether small stock to continue to outperform going forward:..........................3
3.c Analysing the result of Fama-French beta is dead:..............................................................3
3.d Indicating the difference or similarity between Frazzini and Pedersen’s betting against
beta:............................................................................................................................................4
3.e Analysing whether the results argument is for or against market efficiency:......................4
4.a Stating what are the risk that is being avoided:....................................................................4
4.b Explaining the method for buying/selling stock:.................................................................5
4.c Stating whether it is in effect during certain market conditions:.........................................5
4.d Stating whether trading illiquidity effect their marketing strategy:.....................................6
5.a Indicating whether DFA can keep its competitive advantage:.............................................6
5.b Stating whether competitors cannot emulate DFA:.............................................................7
6.a Stating how DFA’s new tax-managed strategies work:.......................................................7
6.b Indicating whether the product would be successful in broad scale or small niche market:
....................................................................................................................................................8
7. Indicating whether the company needs to modify their basic strategy if it wants to grow its
assets or profits:..........................................................................................................................8
Reference:..................................................................................................................................9

DIMENSIONAL FUND ADVISORS, 2002 HBS CASE
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1. Indicating whether DFA add value for its investors:
The strategy that was adopted by DFA is relevantly different, where it aims in adding
more value to the investors by adopting an appropriate trading strategy. Hence, DFA aims in
reducing the transaction cost and create value for the clients. Moreover, the strategy allows
DFA to absorb the selling demand from others, while providing relevant levels of discount on
the stock purchase, which in turn help in reducing the adverse selection problems. Hence,
from the relevant evaluation, it has been detected that with the investment strategy
organisation is able to improve the level of income from investment and create high level of
value to the investors (Cohen and Randolph).
2.a Evaluating their marketing strategy:
The main marketing strategy that is adopted by DFA is to promote the level of
benefits that would be transferred to the investors in form in discounted fees and high value
created from investment. The DFA marketing strategy is to providing information regarding
the benefits that would be generated for the investors during their investment period.
Moreover, the additional level of value that is added to the investment of the investors is also
disclosed in the marketing programmes to help attract more investors who are keen on
increasing their returns from investment while reducing the total level of expenses from
investment. The main reason behind using the current marketing strategy is to provide all the
relevant information to the investor regarding the progress and benefits that could be
provided to the investors over their investment period. These highlighted benefits and
improvement in investment value would directly attract more investors into the vicinity of
DFA.