The Cost of Tracking an Index (Dimensional)

The last several years have been dominated by the rise of the index fund and low-cost investment strategies.

For the record, I think this is absolutely a good thing since it emphasizes one of our firm’s core investment beliefs: focus first on what you can control (i.e. costs). That said, if the objective of an index fund is to track an index, it’s helpful to know when a product might fail to properly track, or when the underlying exposure might not actually be what the investor is intending to achieve.
This link directs to an article and research study from Dimensional Fund Advisors to discuss this very issue. I hope you find it informative and please be sure to let me know if you’d like to discuss this or anything else. The Cost of Tracking an Index


Adam C. Harding, CFP

For informational purposes only. Not to be considered investment advice.

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