Dfa - Dimensional Fund Advisors
Would you invest in DFA?
Yes due to steady returns provided by the company and as investors are generally past performance chasers, one has no reason not to invest in DFA. The company was founded on a sound investment style based on its core belief in sound academic research, passive fund management. Until almost the end of the 20th century DFA had found a way to make money actively with a passive investment strategy.
But looking forward, according to me it needs to evolve with the times and look for questions regarding its own strategy and its evolution with the times and the questions facing the financial future.
As highlighted by the boom in the I.T sector towards the end of the last century that DFA missed out on completely, DFA on principle is always poised to miss out on new technology companies, as they intrinsically have low book to market value.
Also my another objection to DFA’s selection of small cap stocks only is that these category of companies are among the worst hit companies during a financial crisis because of their limited access to credit and most of these companies don’t survive a major recession. Even some proponents of the efficient market hypothesis have argued that due to DFA and similar companies investing in this particular style, this style’s edge had been eroded.
Lastly many prominent academicians and financial institutions have called into question the efficacy of the efficient market theory due the financial bubble created in the financial markets. That fact that market price of a stock represents the fair price has been called into question. Most of the big banks now act as quassi-exchanges and execute trades within themselves without needing to inform the stock exchange, in which case the market may not posses sufficient information.
What do you think of DFA as a business?
a. Does it add value for investors?
DFA’s fees tended to be lower than those of most actively managed funds but higher than those of pure
Yes due to steady returns provided by the company and as investors are generally past performance chasers, one has no reason not to invest in DFA. The company was founded on a sound investment style based on its core belief in sound academic research, passive fund management. Until almost the end of the 20th century DFA had found a way to make money actively with a passive investment strategy.
But looking forward, according to me it needs to evolve with the times and look for questions regarding its own strategy and its evolution with the times and the questions facing the financial future.
As highlighted by the boom in the I.T sector towards the end of the last century that DFA missed out on completely, DFA on principle is always poised to miss out on new technology companies, as they intrinsically have low book to market value.
Also my another objection to DFA’s selection of small cap stocks only is that these category of companies are among the worst hit companies during a financial crisis because of their limited access to credit and most of these companies don’t survive a major recession. Even some proponents of the efficient market hypothesis have argued that due to DFA and similar companies investing in this particular style, this style’s edge had been eroded.
Lastly many prominent academicians and financial institutions have called into question the efficacy of the efficient market theory due the financial bubble created in the financial markets. That fact that market price of a stock represents the fair price has been called into question. Most of the big banks now act as quassi-exchanges and execute trades within themselves without needing to inform the stock exchange, in which case the market may not posses sufficient information.
What do you think of DFA as a business?
a. Does it add value for investors?
DFA’s fees tended to be lower than those of most actively managed funds but higher than those of pure