Maybe we should stick to the current rules and then Vanguard can advertise their funds of funds that have 0.00% expense ratios!
It is funny that most of vanguard's funds of funds list the composite expense ratio of the underlying funds and they are still way lower than most of the competing funds of funds that only list their top layer of added expenses.
How about Jeffrey J. Unterreiner, who manages the Opti-Flex Fund, who states "his results justify the costs." The fund, whose assets total about $6.5 million, is up 16.6 percent for the year, an average of 14.9 percent in the past three years and an average of 10.7 percent over five years. "Obviously, over the time period if I've been doing the management we've added value. And that's really the only reason we offer our services to anyone." Not the 2.4% expense ratio this dude collects. :
Mr. Unterreiner managed to beat the SP500 index (although basically equalled the SP500 in YTD). However the SP500 performed about the worst of any market segment over the last 1, 3, and 5 years. Look at other segments of the market (international, small cap, value, etc) and it is clear that Mr. Unterreiner didn't add much value at all. The total international index beat his returns by 8% and 5% per year over the 3 yr and 5 yr periods, respectively. I'm assuming he had access to international investments for at least part of his portfolio. Why couldn't he get some of those returns? Oh yeah, there's that whole expense drag holding him down. :