Hi guys! Hoping to get some insight on what the portfolio management Group is like at Dimensional Fund Advisors.
My main concern is their investment philosophy. They base investment decisions on academic research and tend to stick more towards the passive side. If I want to be an active manager one day, would it be a bad choice to start out at Dimensional Fund Advisors?
I've connected very well with the people, but I don't want to start my career in the wrong direction. Thoughts?
DFA thinks they beat the [passive index] benchmarks. So far I don't see reason to dispute this: a slight but definable edge (Google them and read some discussions people have had about them), which is tough to get. What do you think you have that could benefit them?
Not sure how I can benefit them lol, but I was just wondering if this would be a good place to start a career given my long-term goals. I currently have the opportunity to work for them.
Disclaimer: I don't work there, but here is my impression of them:
If you're asking about doing fundamental stock research then DFA isn't the place for you. Like you said they do emphasize the academic research and I believe the DFA portfolio management group is effectively allocating the trades to the right portfolios.. The themes are determined at the top which is informed through quantitatively / macro driven macro teams and then I think a lot of the process is automated and the traders and PMs are primarily responsible for execution. You won't be doing financial statement analysis on single stocks - you might be looking at how aggregate company financials look and how that might influence how you invest. That being said, it is a different form of active management - one that is theory driven and has a lot of optimization and macro research implemented.
Good for maybe getting a look at Booth and not necessarily a bad place to start a career, but not direct experience for being a fundamental analyst.
This answer is pretty accurate but it's too charitable to DFA. I know the firm and the PM department well. You are being nice by saying they're "a different type of active." Hearing that would make them all warm and fuzzy inside, because it would calm their (correct) fears that they've been suckered into spending their career doing glorified back-office work at what is effectively an index shop.
PM folks spend their days processing various reports and doing other bullshit that computers should be doing, and the more ambitious ones advance their careers by inventing fake administrative problems so they can then recommend solutions. I am not kidding. It's pretty much what I imagine federal government work must be like. Wrapping things in red tape and little else.
A typical career-building PM project would be as follows. Consider a portfolio with 3,000 stocks in it. Look at DFA's database to see how many shares the portfolio holds in each stock after market close on Wednesday. Then look at the same database the next morning. The numbers should match because why would your holdings be different between market close and market open? Right? WRONG - turns out the custodian bank (which is like the Wells Fargo Istanbul office or something) has a certain data upload process that creates timing differences that lead to data distortions that alter the records of the middle office provider and blah blah blah fuck me blah blah blah. As a result of this maddening distortion, your portfolio records are off by 0.000003%, and your ability to design a new "workflow" over the course of the next 6 months will be the difference between a $20,000 bonus (mediocre) and a $20,500 bonus (superstar).
If you want to have fun at a DFA interview, ask a PM person what they do all day and watch them squirm as they perform mental gymnastics to explain how their job is even remotely deserving of an "investment management" or "finance" label when in fact it is exactly as I just described above.
Some days I think it's funny and other days I think it's sad, because a lot of smart kids get suckered in by the image of the place (Nobel prize winning professors etc) only to find out after a few months that they're getting totally hosed. Stay away.
100% can back this comment. Stay away from Dimensional.
I have a superday with DFA this month. Any advice for interviews and exit opportunities should this end up being the only offer I get?
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