What Works on Wall Street (O'Shaugnessy) Message Board

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Strategies & Market Trends : What Works on Wall Street (O'Shaugnessy)

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To: sea_biscuit who wrote (20)	2/24/1997 4:22:00 PM
From: sea_biscuit	of 109

Sorry to follow-up on my own post but while on the topic of expenses, I did an analysis of the effect of increasing expense ratios for the Cornerstone Value Fund from 1969 to 1995 and compared it to S&P 500 assuming an expense ratio of 0.2 for the latter. The results are as below. The figure of "16.00" for S&P 500 means that an investment in the index would multiply by a factor of 16.00 from 1969 to 1995, __after adjusting for expenses__. Exp. Exp. adj. Ratio returns 0.2 16.00 <--- S&P 500 (1969 - 95) 0.2 48.76 <--- Cornerstone Value Fund (1969 - 95) 0.3 47.46 0.4 46.19 0.5 44.95 0.6 43.75 0.7 42.58 0.8 41.43 0.9 40.32 1.0 39.24 1.1 38.18 1.2 37.15 1.3 36.15 1.4 35.17 1.5 34.22 As you can see, an expense ratio of 1.5% can really eat up a large part of the benefits that arise from the strategy. To me, any expense ratio above 1.0% will make the returns quite unattractive. Dipy.

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