OCTO CAPITAL | FIDUCIARY FINANCIAL ADVISOR | BLOOMFIELD HILLS MICHIGAN
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​Active: According to Fidelity, the average equity mutual fund management fee is about 1.4% annually, and some have a 1% or 2% load in addition to an annual fee (1). It is worth mentioning that there are quite a few managers using ETF’s that range from 0.05% to 0.55% to build their own actively managed portfolio and charge 1% - 1.5% annual management fee. We can place those managers and portfolios in the active fund category. Using index, passive funds, or ETFs to actively manage a portfolio, whether it is a tactical allocation or another, still qualifies as active management.
 
Indexing: Index funds from one of the lowest cost providers, Vanguard, cost approximately 0.15% annually. We have seen the cost as low as 0.05% and as high as 0.50%
 
Dimensional: The average portfolio we create for our clients is close to 0.28% annually in fund fees. Some funds in the portfolio are less and some are slightly higher. DFA funds are offered as institutional shares only, they do not pay commissions, there are no 12b-1 fees or any other kick-backs to advisors.
 
DFA funds are slightly more expensive than pure indexing, but very far from the expensive active funds. Being an independent firm, we have the ability to pick almost any fund or ETF provider in the investing universe. And, we do not get paid by the fund companies. If we were to find evidence that using funds that are less expensive than DFA is beneficial to our clients, we would gladly do so.

​It is our opinion that DFA funds are likely to provide better investment experience to our clients that is well worth the difference in fees of approximately 0.13% - 0.18% annually comparing to pure index funds or ETF’s.
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  1. Fidelity ETFs vs. Mutual Funds. Wiley Global Finance.

Octo Capital

31600 Telegraph Road, Suite 200
Bingham Farms, MI 48025
(248) 731-7729
©2023 OCTO Capital, LLC. 
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