SHEARWATER CAPITAL

When Shearwater Capital was founded in 1999, most financial advisors were recommending actively managed funds with exorbitant annual expense ratios. We had to convince our clients that they would be better off with a low-cost passive investment approach. We provided data showing that the great majority of actively managed funds failed to beat their benchmarks and there was no justification for paying the higher fees associated with active management. Now, 20 years later, thin

As a fee-only, independent investment advisory firm, we are free to choose any available investment option for our clients. For the past 18 years, we have relied mainly on funds from Dimensional Fund Advisors to construct our client portfolios. We use Dimensional funds because we believe they provide the greatest value for our clients, however, we periodically review our investment choices to see if any better options have become available. Exchange-traded funds (ETFs) can be

In constructing our client portfolios, we rely primarily on DFA funds, for both equity and fixed income securities. While most of our clients understand the value of DFA stock funds, we sometimes get requests for individual bonds, in place of bond funds. This is usually based on the fact that individual bonds can be held to maturity if interest rates rise, thereby assuring repayment of the bond’s face value, or principal. While this strategy seems reasonable at first glance,

As an investor, you can choose between active and passive investment management. Active management is an attempt to beat the market averages through stock selection and/or market timing. Reams of academic data have shown that this is very difficult to achieve over the long run, but that doesn’t stop people from trying. With passive management, the goal is simply to capture market returns, usually through the use of low-cost index funds. The funds from Dimensional Fund Advisor

Shearwater Capital was founded by Eric Malden and me in 1999, while we were classmates in the Executive MBA program at Washington University. We started the company due to a long-standing interest in finance, and a lack of attractive investment management options for physicians and their families. Rather than benefitting their clients, most of the financial advisory firms we encountered were designed to enrich themselves by selling high cost insurance products and actively ma