Dfa- Dimensional Fund Advisor

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------------------------------------------------- Case Study-Dfa Dimensional fund Advisors Submitted By:- Azouaou Dahmoune Drishti Oza Jeffery Meeks…show more content…
As can be seen on the next table the DFA was able to save an average of 1.89% for the period (1986-2001) with improvement from year to year (average for previous 4 years was 3.79%) Year | Discount block from total cost (%) | 2001 | 3.33 | 2000 | 4.6 | 1999 | 3.69 | 1998 | 3.56 | 1997 | 2.56 | 1996 | 2.16 | 1995 | 1.82 | 1994 | 2.1 | 1993 | 1.78 | 1992 | 1.44 | 1991 | 0.74 | 1990 | 0.91 | 1989 | 0.56 | 1988 | 0.61 | 1987 | 0.41 | 1986 | 0.02 | average | 1.893125 | average (1998-2001) | 3.795 | Thus, this block-trading strategy combined with adverse selection avoidance allowed the DFA to beat the market and thus the benchmark by about 200 basis points over the 20 year period. And as a result became the benchmark for these types of portfolios. Question 5 Is DFA’s strategy working? What is performance of DFA’s funds from inception up until the time of the case in 2002? Answer Yes, the strategy is working as DFA took several measures to ensure that the lemon problem didn’t exist. The measures were; by not completing the transaction just before few days of company’s earnings announcement. They would avoid stocks, which could give negative impact. Also they would avoid the stocks

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