DFA Reduces Cost Of Mutual Funds

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Dimensional Fund Advisors (DFA) announced they are cutting costs on seventy-seven of their mutual funds beginning February 28th.  This represents an average management fee reduction of 8% on their funds, which are already considered low cost when compared to their industry peers.

Any reduction in the cost of the mutual funds we use means that you, the investor, get to keep more of the returns earned by the fund.  We have long advocated for using low cost, tax efficient funds to implement our portfolios.  Morningstar, an independent mutual fund rating firm, has concluded in their own study that the cost of a mutual fund is one of the best predictors of the fund’s ability to perform well relative to its peers.

Naturally, we ran a quick calculation to try and estimate how much we expect the annual savings will be for our portfolios.  We determined that the average cost of our 60% stock/40% bond portfolio will drop by more than 6%.  We also expect to see our clients – in aggregate — save more than $55,000 per year as a result of these cost reductions!

This is great news for our clients and we will continue to find ways to drive the cost of our portfolios lower without affecting the underlying investment strategies.

Steven Elwell, CFP®
Partner, Chief Investment Officer


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