DFA Portfolio Design

By Dan Crimmins on November 7, 2016 in Investing

Ken French is a member of the Board of Directors of Dimensional Fund Advisors LP (DFA), and provides consulting services to the firm. In this conversation with DFA Chairman and Co-Chief Executive Officer David Booth, Ken provides insight on how Dimensional designs their various investment portfolios. The portfolio design delivers the specific market exposure while reducing trading costs – by reducing turnover. He discusses how they provide flexibility to the trading desk who executes the portfolio construction to order to maximize potential returns.

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Ken stresses that the firm’s management aims to provide flexibility to the traders to allow for low turnover, and allow the traders to be tax sensitive to the potential trades.

There is no stock that we absolutely love or no stock that we absolutely hate

Ken French (1)

Click below to watch the 2 minute video:

DFA Portfolio Design:

(1) Ken French is the Roth Family Distinguished Professor of Finance at the Tuck School of Business at Dartmouth College. He is an expert on the behavior of security prices and investment strategies. He and co-author Eugene F. Fama are well known for their research into the value effect and the three-factor model, including articles such as “The Cross-Section of Expected Stock Returns” and “Common Risk Factors in the Returns on Stocks and Bonds.”

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