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Recent Midwest Research
 •  Forecasted Fixed Income & Equity Returns
 •  Advantages of a Quantitative Approach
 •  How to Avoid the Next Hedge Fund Blow-Up
 •  Expenses: Do They Matter?
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   Research Brief: Expenses: Do They Matter?

During the extraordinary 1990s investors were rarely concerned about portfolio management expenses as equity and fixed income returns were amongst the best ever. However, due to high market valuations and the precarious macroeconomic environment, annual U.S. equity and fixed income returns over the next ten years are expected to be lower than their historic averages.

In a low return environment such as this, it becomes clear that to increase purchasing power one must not only select superior investments, but also minimize fees and expenses. Please note the following advantages that Midwest has in this area:

  • MIDWEST is an independent advisor that derives 100% of its income from portfolio management fees. This aligns us with client interests and allows us to actively work to keep transaction and all other expenses to a minimum (see Exhibit I below for charges investors face at many financial services firms).

  • MIDWEST can generally save equity and fixed income investors at least 1.00% and 0.50% respectively in unnecessary annual expenses. These savings become enormous when compounded over time (see Exhibit II below for analysis).

  • MIDWEST can manage your portfolio in a highly tax-efficient manner, thereby minimizing what is often the largest investment expense.

Please contact us if you would like a no-obligation analysis of your portfolio management expenses.

"Remember, investment returns are uncertain. But you have almost total control over costs."
- Jonathan Clements

   Exhibit I - Expenses: Too Many to Count!

Below is a list of the numerous expenses that investors face at many financial services firms. Because Midwest is an independent organization, we can help you minimize or avoid most of these charges.

Portfolio Management Expenses

"The large print giveth, and the small print taketh away."
- Tom Waits

   Exhibit II - Long-Term Impact of Expenses on Portfolio Returns

Although often overlooked, expenses have a dramatic impact on portfolio returns over time. Because Midwest is an independent organization and Portfolio Management Is Our Only Business ®, conflicts of interest are eliminated and we are able to actively work to keep these expenses to a minimum.

On many portfolios at least 1.00% can be saved in annual equity expenses, and 0.50% in annual fixed income expenses. As the graphs below demonstrate, this factor alone can save Midwest clients a tremendous amount of money over the course of twenty years.


Equity Expense Savings Analysis Graph


Fixed Income Expense Savings Analysis Graph

NOTE: Assumed annual returns based on historic market average estimates from 1926 to 2005 (contact us for data).

8383 Greenway Blvd., Suite 600   •   Middleton, WI 53562   •   (608) 273-2900   •   contact@quantmanagement.com

Past performance does not guarantee future success. All investments are subject to risks, including the possible loss of principal. You should consider Midwest based on the suitability of its investment strategies in relation to your objectives and risk tolerance. By using this website, you acknowledge that you have read and accepted Midwest's Terms of Use.

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