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Case | HBS Case Collection | January 2012 (Revised March 2012)

Dimensional Fund Advisors (DFA)'s Entry into the Retirement Market

by Lauren Cohen and Christopher Malloy

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Abstract

This case examines Dimensional Fund Advisors (DFA)'s decision to enter the retirement market with their new "Dimensional Managed DC" product, a complete retirement solution that aimed to provide investors with what they really wanted: the same standard of living in retirement that they had while working. The case considers the challenges of entering the fiercely competitive retirement market, introduces students to the large literature on the behavioral biases of individual investors, and asks students to evaluate an innovative new financial product designed to automate the process of retirement investing.

Keywords: Retirement; Asset Management;

Language: English Format: Print 23 pages EducatorsPurchase

Citation:

Cohen, Lauren, and Christopher Malloy. "Dimensional Fund Advisors (DFA)'s Entry into the Retirement Market." Harvard Business School Case 212-068, January 2012. (Revised March 2012.)

Related Work

  1. Supplement | HBS Case Collection | February 2013

    Dimensional Fund Advisors (DFA)'s Entry into the Retirement Market (CW)

    Lauren Cohen and Christopher J. Malloy

    Citation:

    Cohen, Lauren, and Christopher J. Malloy. "Dimensional Fund Advisors (DFA)'s Entry into the Retirement Market (CW)." Harvard Business School Spreadsheet Supplement 213-713, February 2013.  View Details
    CiteView DetailsPurchase Related
  2. Teaching Note | HBS Case Collection | January 2012 (Revised February 2013)

    Dimensional Fund Advisors (DFA)'s Entry into the Retirement Market (TN)

    Lauren Cohen, Christopher Malloy and Timothy Gray

    Keywords: Retirement; Investment Funds; Financial Services Industry;

    Citation:

    Cohen, Lauren, Christopher Malloy, and Timothy Gray. "Dimensional Fund Advisors (DFA)'s Entry into the Retirement Market (TN)." Harvard Business School Teaching Note 212-069, January 2012. (Revised February 2013.)  View Details
    CiteView DetailsPurchase Related

About the Authors

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Lauren H. Cohen
L.E. Simmons Professor of Business Administration
Finance
Entrepreneurial Management

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Christopher J. Malloy
Sylvan C. Coleman Professor of Financial Management (Leave of Absence)
Finance
Entrepreneurial Management

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View Publications »

 

More from these Authors

  • Article | Management Science | December 2019

    Patent Trolls: Evidence from Targeted Firms

    Lauren Cohen, Umit Gurun and Scott Duke Kominers

    We provide the first large-sample evidence on the behavior and impact of nonpracticing entities (NPEs) in the intellectual-property space. We find that, on average, NPEs appear to behave as opportunistic “patent trolls.” NPEs sue cash-rich firms and target cash in business segments unrelated to alleged infringement at essentially the same frequency as they target cash in segments related to alleged infringement. By contrast, cash is neither a key driver of intellectual-property lawsuits by practicing entities (e.g., IBM and Intel) nor of any other type of litigation against firms. We find further suggestive evidence of NPE opportunism: targeting of firms that have reduced ability to defend themselves, repeated assertions of lower-quality patents, increased assertion activity nearing patent expiration, and forum shopping. We find, moreover, that NPE litigation has a real negative impact on innovation at targeted firms: firms substantially reduce their innovative activity after settling with NPEs (or losing to them in court). Meanwhile, we neither find any markers of significant NPE pass-through to end innovators nor of a positive impact of NPEs on innovation in the industries in which they are most prevalent.

    Keywords: Patent trolls; patents; innovation; Patents; Lawsuits and Litigation; Ethics; Innovation and Invention;

    Citation:

    Cohen, Lauren, Umit Gurun, and Scott Duke Kominers. "Patent Trolls: Evidence from Targeted Firms." Management Science 65, no. 12 (December 2019): 5461–5486. (Cited in the United States Federal Trade Commission Report on Patent Assertion Entities, 2016.)  View Details
    CiteView DetailsSSRNFind at Harvard Related
  • Working Paper | 2019

    Don't Take Their Word For It: The Misclassification of Bond Mutual Funds

    Huaizhi Chen, Lauren Cohen and Umit Gurun

    We provide evidence that mutual fund managers misclassify their holdings, and that these misclassifications have a real and significant impact on investor capital flows. In particular, we provide the first systematic study of bond funds’ reported asset profiles to Morningstar against their actual portfolios. Many funds report more investment grade assets than are actually held in their portfolios, making these funds appear significantly less risky. This results in pervasive misclassifications across the universe of US fixed income mutual funds by Morningstar, who relies on these reported holdings. The problem is widespread- resulting in about 30% of funds being misclassified with safer profiles, when compared against their actual, publicly reported holdings. “Misclassified funds” – i.e., those that hold risky bonds, but claim to hold safer bonds – outperform the actual low-risk funds in their peer groups. “Misclassified funds” therefore receive higher Morningstar Ratings (significantly more Morningstar Stars) and higher investor flows due to this perceived outperformance. However, when we correctly classify them based on their actual risk, these funds are mediocre performers. Misreporting is stronger following several quarters of large negative returns.

    Citation:

    Chen, Huaizhi, Lauren Cohen, and Umit Gurun. "Don't Take Their Word For It: The Misclassification of Bond Mutual Funds." NBER Working Paper Series, No. 26423, November 2019.  View Details
    CiteView Details Read Now Related
  • Teaching Note | HBS Case Collection | October 2019

    ClearLife: From Prospect to Platform

    Alexander Braun, Lauren H. Cohen, Mauro Elvedi and Jiahua Xu

    Teaching Note for HBS No. 219-119.

    Citation:

    Braun, Alexander, Lauren H. Cohen, Mauro Elvedi, and Jiahua Xu. "ClearLife: From Prospect to Platform." Harvard Business School Teaching Note 220-036, October 2019.  View Details
    CiteView DetailsPurchase Related
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