Dimensional Fund Advisors

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ElJefe

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I have been invited to interview with Dimensional Fund Advisors out of Santa Monica. Does anyone know about them; or have any information that would be useful in making a decision about this firm?
Thanks in advance.
 
ElJefe - we use their funds extensively. If you’d like to chat offline, drop me your email address.
 
i’ve been reading about their funds. some very prominent people over there. are you going in as an analyst or as a distributor of their product?
 
Employer: Dimensional Fund Advisors, Inc.
Description: Dimensional Fund Advisors applies academic research to the practical world of investing. Our objective is to help clients structure globally diversified portfolios and to add value through engineering and trading.
Dimensional manages assets exclusively for institutional investors and the clients of registered financial advisors. From offices in Santa Monica, London, Sydney, and Austin our professional staff supervises portfolios twenty-four hours a day.
The firm’s investment group is seeking an Investment Associate with very strong analytical, quantitative, and interpersonal skills. This position will be involved in many phases of portfolio construction, from security selection, through execution and post trade monitoring. We are seeking top-tier candidates with the following backgrounds:
• Investment philosophy grounded in efficiency of capital markets
• Record of outstanding academic achievement (pls. provide GPA and GMAT info.)
• Previous exposure to capital markets through work in trading, investment banking, consulting, asset management, hedge funds, or in another investing or finance capacity a plus
• Excellent interpersonal skills with ability to communicate ideas both verbally and in writing
• Solid quantitative, analytical, and computer skills
• Hard working, detail oriented, intellectually curious, and self-motivated
 
> • Record of outstanding academic achievement (pls.
> provide GPA and GMAT info.)
Jackasses.
 
Asking for GPA and GMAT makes them jackasses? Are you sure it doesn’t make them “smart employers?” At least they didn’t ask for “degree from a top institution” as many HFs do.
 
I would say that they just want proof that you are what you say you are, and that you are not lying in the interview…
 
HoldSideAnalyst Wrote:
——————————————————-
> Asking for GPA and GMAT makes them jackasses? Are
> you sure it doesn’t make them “smart employers?”
> At least they didn’t ask for “degree from a top
> institution” as many HFs do.
Yes. In my opinion, it makes them jackasses.
Why? Because they are too lazy to take the time to evaluate talent and use shortcuts that are effectively discriminatory.
Same story at most HF and IBs unfortunately.
Many large successful AM houses do NOT take this approach in hiring.
 
dimensional funds have people that won Nobel Prizes. they’re academically grounded based on the philosphy on their website. you expect academics to respect other academics. its not being jackasses though. they can do what they want.
 
Danteshek Wrote:
——————————————————-
> HoldSideAnalyst Wrote:
> ————————————————–
> —–
> > Asking for GPA and GMAT makes them jackasses?
> Are
> > you sure it doesn’t make them “smart employers?”
>
> > At least they didn’t ask for “degree from a top
> > institution” as many HFs do.
>
> Yes. In my opinion, it makes them jackasses.
> Why? Because they are too lazy to take the time
> to evaluate talent and use shortcuts that are
> effectively discriminatory.
> Same story at most HF and IBs unfortunately.
> Many large successful AM houses do NOT take this
> approach in hiring.
I second that, but I do understand that they need some method to screen candidates. The GPA factor IMO isn’t the best…I like resume’s and experience over GPA.
 
Back to DFA: Are these the Fama/French 3-factor guys? The CAPM replacement? For a while they were kicking everyone’s hindside, but I thought I had heard that more recently they were slipping back a bit to join the pack more frequently.
Still I’d think their highly quantitative approach to investing would be a very cool place to work, assuming you’re close to the action.
 
Back to DFA: Are these the Fama/French 3-factor guys? The CAPM replacement? For a while they were kicking everyone’s hindside, but I thought I had heard that more recently they were slipping back a bit to join the pack more frequently.
Still I’d think their highly quantitative approach to investing would be a very cool place to work, assuming you’re close to the action.
 
Asking for GPA for someone under 5 years out of school hardly makes you a jackass. I’m absolutely of the camp that believes GPA is highly misleading, but it’s still relevant. I’ll give a break to someone with a good GPA from a crappy school, and to a so-so GPA from a good school, but when you see a so-so GPA from a so-so school, you have to say to yourself, “What are the odds this will be a standout employee? They didn’t care enough to go to/weren’t smart enough/couldn’t afford a good school, and even if that 3rd option is true, they didn’t care enough to work hard while they were there. So why again should I take a chance on this person?
 
I believe the group of funds is run by Eugene Fama’s (i think thats his name) son.
 
i’ve read a couple articles this summer suggesting that a lot of the quants that blew up in july/august were using Fama and French on steroids. Specifically, they were buying value and selling growth using models and programmed trading. the secondary point was that the Fama and French strategy is so well known that it is losing its potency. iow, once an arb opp is known it begins to go away. the proliferation of financial planners using DFA funds can’t be helping.
my view is that value will always have an edge because most investors aren’t discipline enough to stick to mechanical value strategies.
 
DarienHacker Wrote:
——————————————————-
> Back to DFA: Are these the Fama/French 3-factor
> guys? The CAPM replacement? For a while they
> were kicking everyone’s hindside, but I thought I
> had heard that more recently they were slipping
> back a bit to join the pack more frequently.
>
> Still I’d think their highly quantitative approach
> to investing would be a very cool place to work,
> assuming you’re close to the action.
Yes…they are the three factor guys.
 
lig Wrote:
——————————————————-
> i’ve read a couple articles this summer suggesting
> that a lot of the quants that blew up in
> july/august were using Fama and French on
> steroids. Specifically, they were buying value and
> selling growth using models and programmed
> trading. the secondary point was that the Fama and
> French strategy is so well known that it is losing
> its potency. iow, once an arb opp is known it
> begins to go away. the proliferation of financial
> planners using DFA funds can’t be helping.
>
> my view is that value will always have an edge
> because most investors aren’t discipline enough to
> stick to mechanical value strategies.
Lig,
These guys using Fama/French levered up aren’t using the strategy they would recommend. I have met with Eugene Fama and he is quick to point out that recongnition of the value premium or size premium can take decades (if not longer). They wouldn’t be recommeding the tools you are describing the quants using.
If the Fama/French model is an arb opportunity then it will go away for sure. Fama and French agrue that this is not an arb though. They believe that high book/market (value)and size risk capture two risk factors that can’t be diversified away. So like market risk it is systematic.
They explain it as a cost of capital issue. Many disagree with them and some have gone as far as to accuse them of data mining (even though they used out of sample research to back up their findings).
Value has outpaced growth over long periods….it is either behavioral or a true risk factor. If it is behavioral then it should be arbed away. Because as we all know, information that both sides know in the market is essentially useless. Time will tell for sure.
Disclaimer: I am one of those financial planners using DFA
 
mwvt, sure I’m aware of all that. the quants that blew up were not purists or using anything that F&F would necessarily agree with - that’s why i made the steroids comment. DFA makes a lot of sense, and as i mentioned, most investors aren’t disciplined to stick with these hyper-rational portfolios. thus the edge that DFA takes advantage of never really goes away. If mechanical, or formulaic investing is your thing then DFA is a very solid choice imho.
here’s the article i was thinking of which, upon review, wanders around a bit more than i remembered. not even sure that the author has the F&F theory right.
http://online.wsj.com/article/SB118791448211107333.html
“Academics, notably Eugene Fama at the University of Chicago with Kenneth French at Dartmouth, have documented how, over time, stocks with smaller market capitalizations and lower valuations tend to do better than the overall stock market.
The reason for the outperformance, Mr. Pradhuman said, is both smaller companies and companies with low valuations are more likely to go bust if the economy sours, so they are riskier. Since the U.S. economy has been highly successful, taking the risk of buying the shares of such companies has paid off.
Since history had shown that buying small and low multiple companies was a good idea, many quant models screened for them. When stocks started getting rattled last month after credit markets seized up, worries about business risk rose sharply and the shares of those companies bore the brunt of the selling.
Other investors had bid up the share prices of some of these companies in the belief that leveraged-buyout firms would snap them up at healthy premiums. When credit tightened, takeover prospects dimmed. The combined effect of some quant funds and other investors cutting positions in the stocks sent them lower still.” - WSJ [Continues]
…
“University of Rochester finance professor William Schwert has found that after academic papers come out highlighting opportunities to outperform the market, those opportunities tend to diminish or outright disappear. The popularity of quantitative strategies in recent years may mean that the opportunities to make money are getting whittled away more quickly than ever, according to Invesco PLC investment strategist Diane Garnick.” - WSJ [Continues]
 
Thanks for the link Lig. I will check out the whole article. I am always interested in debate on this subject.
 
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