Passive Asset-Class Investing is a More Cost Efficient and Effective Approach

THE QUESTION:
"How high can a fund's expenses be in order to still expect increased risk adjusted portfolio returns?" (1)

THE ANSWER :
"It does indeed seem worth it to switch to the DFA funds.(2) Additionally, even if the financial advisor provides no value to the investor other than giving him access to the DFA funds (an assumption that, it is hoped, is not valid in the majority of cases), it is still worth it to pay the advisor as much as 1.285% of assets managed annually "…

Journal of Financial Planning
"Mutual Fund Expense Ratios: How High is Too High"
September, 2004, Page 54, Example 6

1. Source: September, 2004 issue of the Journal of Financial Planning, the official journal of the Certified Financial Planners' Association (FPA) :

2. Comparisons were primarily between portfolios of Vanguard funds and of DFA's Passive Asset Classes.