Dfa Case Study

DFA’s investment strategy is based on their belief in the principle that stock market is efficient. They attempt to match a broad-based, value-weighted small-stock index and position themselves in the market as a passive fund manager that still claimed to add value by capturing specific dimensions of risks identified by financial science. DFA’s investment strategy incorporates elements of both passive and active management. It is passive in the sense that like many other index managers, it focuses on the importance of diversification, lower turnover and lower fees than actively managed portfolios. It is active in the sense that it develops its small-value stock focus based on academic research and uses certain techniques (such as

This paper will assess my ability to maximize my personal return on investment with an allocation of $1,000,000. The overall goal of this exercise is to obtain the highest return possible within the next 12 months. I am limited to the following asset classes for allocation of all investments:

The Yale Endowment is known in the financial industry as a pioneer in using a combination of innovative asset allocation and active management to produce impressive long-term performance. In fact, the Endowment produced a 17.8% average annual return, net of fees, in the ten-year period ending June 30, 2007.1 This performance is particularly impressive given that, in recent years, the Endowment portfolio has carried less than a 40% weighting in equities. Instead, under the leadership of Chief Investment Officer Dave Swensen, the Yale Investments Office

Updates to the Consumer-Driven Personal Assistant Program (CDPAP) laws as of April of 2016, state that the Medicaid consumer has the ability to control the care they receive by hiring almost anyone they want, which can include any member of the family besides his/her spouse.

DFA’s founders believed in two principals (outside of efficient markets): the value of sound academic research, and the ability of skilled traders to contribute to a fund’s profits even when the investment was inherently passive. By working closely with the academic world, DFA is able to exploit opportunities generated from academic research before others are able to; this creates opportunities for short and long-term excess return. Also, working in stocks that other mutual funds do not participate (micro, small-cap) allows DFA to exploit opportunities in otherwise illiquid stocks. By having a large presence in this market, the company is able to take advantage of trading opportunities with counterparts (liquidity discounts from block purchases).

With the “management centric” concept that is core strategy would be identify and recruit top level ethic minority managers from fortune 1000 companies to run and add value to his fund’s investments.

Instead of relying solely on external management, they allocate 68% of their endowment to internal management and the remaining 32% to outside asset managers. In order to do this, HMC employed 38 investment professionals and 148 other employees whose jobs were solely to manage the $19 billion dollars in total assets, of which $15.1 billion were endowment funds. This management strategy generated expenses of around $93 million dollars per year (49 basis points), and produced a real return of 11.3%, after expenses. This method of investment costs about 19 more basis points than a passive strategy and about 51 basis points cheaper than a typical active investment strategy using 100% outside managers. Harvard University opted for this strategy because it is cheaper than a traditional active management strategy while still allowing them the ability to adjust their risks taken and expected returns in order to remain on the “efficient frontier” of what return was required to meet their internal institutional goals.

BP America had a different defined contribution plan. The company offered employees the opportunity to buy shares of company stock, invest in a stable income fund managed internally and seven public mutual funds. The mutual funds included three active funds on US equities, one active fund on international equities, two active balanced funds that invested on bonds and stocks, and one index fund. Plan assets were valued at $2 billion, and the plan had 12,892 participants, making it smaller to Amoco’s. In contrast to Amoco’s plan, only 16% of the assets were invested in company stock, and 51% of the assets were invested in the stable income fund. The rest of the assets were invested mostly in one of the equity funds. Each participant on average had assets of $156,800 in the plan, and made annual contributions of about

The combination of five factors in Yale’s investment philosophy plays an important role to Yale’s successful investment performance. However, among the five factors, the most critical and non-replicable factors are Yale’s ability to identify and invest in inefficient markets and to hire superior managers with aligned incentives; all of which came from expertise and years of experience in the industry. David Swansen’s expertise, in particular, plays a big role.

David Fletcher is a portfolio manager with many years of experience and success under his belt. He currently is a limited partner managing an Emerging Growth Fund for Jenkins Fletcher Partnership or JFP. The company was small when David started and consisted of a CEO, Paul Jenkins, CFO, 2 financial assistance, 4 research analyses, 1 research assistant and a receptionist. David first started with JFP he hired an Administrative Assistance, Whitney to help organize his calendar, contact companies and take messages, etc. Whitney proved to be capable and eager to learn. Under David’s guidance she received her MBA and

From September 3rd, 2015 to October 28th, 2015, our group was given the opportunity to manage an investment portfolio, with the goal of maximizing the value of the portfolio through acquiring, holding, and selling stock. The beginning cash balance of the portfolio was $100,000, and our group had the ability to make up to 500 trades. During this time period, our group made 20 stock purchases and sold stock twice. At the close of business on October 28, 2015, the value of our group’s portfolio increased from $100,000 to $106,785.33, yielding a return of  6.78% (((106785.33/100,000)-1) x 100)). In comparison to the S&P 500 returned at 7.16% and the Dow Jones having a return of 8.65% (Yahoo).

Blunt thought that NYL had a chance to sell a very large volume of immediate annuities through the roughly 500,000 independent and company-based investment advisors in the United States who helped people manage their retirement assets. To do this, he wanted to make a multimillion-dollar investment in people and resources to try to convince these investment advisors to sell NYL’s immediate annuities.

National Mutual Funds (NMF), founded in the 1940s, is one of the most important mutual fund companies in the brokerage industry in the United States. The company has extended from a mutual fund company to a financial center offering mutual funds, brokerage products including stocks and bonds, insurance products, and a variety of planning tools to help customers save for major life needs. However, since the market downturn, which is hurting many brokerage and mutual fund houses, NMF’s profits and operations have been affected significantly. To respond to the market slowdown, Harry Smallwood, President of NMF Retail Services, has come up with a directive to reorganize the call centers in the Retail Services Division in an effort

1. The fund deals with technology driven companies due to the expertise of its fund manager in that area; comfortable in prediction of individual stock

Blackstone Group L.P. (NYSE:BX)’s size does provide a competitive advantage that could transform to sustainable growth over a longer period of time. Larger alternative asset managers have been the recipients of a tendency to consolidate assets, which is expected to continue onward. Blackstone 's 2-and-20 fee structures on assets under management give it significant operating leverage, and allow it to support excellent margins among rapid growth. Blackstone is the leading option for many pension funds, endowments, family offices, etc. Having the “Blackstone” brand name as a leading competitive advantage.