The Big Stuff

You've probably read a financial article recently on the subject of mutual fund or Exchange-Traded Fund (ETF) expenses.  You might have even seen a television advertisement about index fund expense ratios where one firm claims moral superiority for having lowered costs by 0.01%.  

Don't get me wrong, I'm all for low costs.  But I'm much more concerned with long-term financial outcomes for our clients.  And achieving favorable outcomes requires us to focus on the big stuff, like asset allocation.  The table below finds that the difference between bonds and large-cap stocks was over 4% a year since 1928.  The difference in returns between large cap stocks and small value stocks was almost 4% a year.

What do you think has a bigger impact on your financial situation -- making (and sticking with) smart decisions about your portfolio asset allocation, or shaving another 0.01% off your portfolio's expenses?  Percentage points or basis points?

Focus on the big stuff...

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Past performance is not a guarantee of future results. Index performance shown includes reinvestment of dividends and other earnings but does not reflect the deduction of investment advisory fees or other expenses except where noted. This content is provided for informational purposes and should not to be construed as an offer, solicitation, recommendation or endorsement of any particular security, products, or services.