Returns of a portfolio are directly affected by all cost associated with the design, implementation, trading and day to day operations of the investments used in a portfolio. William Sharpe states in his Nobel laureate winning paper “The Arithmetic of Active Management” that, “after cost, the return on the average actively managed account will be less than the return on the average passively managed account for any time period”.
Trading in small cap stocks can be expensive. Trading in international and emerging markets can be expensive. It is imperative these portfolio cost are managed properly and no excess fees are generated on behalf of our clients. This is one of our core philosophies and we have aligned ourselves with institutional fund companies that practice this philosophy.