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

David Swensen, manager of the Yale endowment, has been lauded for his innovative approach to portfolio management. Under his guidance, the Yale endowment grew from $1 billion in 1985 to $22.5 billion in 2007. Although the endowment has subsequently plunged almost 30%, Swensen's track record relative to his peers is still very good. Based on his long-term success, it is reasonable to ask if some of his ideas can add value for individual investors. When Swensen started at Yale,