When people talk about ‘equity returns’, they often mean whatever percentage the market delivered last year. That is fine for storytelling, but it is not a definition. A cleaner starting point is price return versus total return: price return is just the change in the share price, whilst total return includes cashflows, typically assuming they are reinvested.

From there, returns can be broken into what must add up mechanically: shareholder yield, nominal earnings growth, and changes in valuation multiples. Yield is broader than dividends alone, because shareholders can also benefit from buybacks and sensible capital allocation, including debt reduction or reinvestment when expected ROIC is attractive. Valuation changes can dominate in the short run, but they are the least reliable piece to ‘count on’, which is why this decomposition keeps return expectations honest.

Avantis and Dimensional are often grouped together for good reason. Both sit firmly within the evidence-based investing tradition, draw heavily on the academic asset-pricing literature, and reject discretionary stock picking in favour of systematic exposure to well-documented sources of expected return. That shared philosophy is no accident. Avantis was founded by former Dimensional professionals and reflects the same intellectual lineage: factor investing grounded in theory, long-run evidence and practical implementability.

Where the firms differ is not in ideology, but in execution. The key distinctions centre on how accounting data are interpreted and adjusted when constructing value and profitability signals. In particular, two related but distinct debates drive much of the divergence: how profitability should be measured, especially whether earnings should be adjusted to be more cash-like by stripping out accruals, and how book equity should be defined in an economy dominated by intangible assets. Together, these design choices explain much of the subtle but meaningful difference between Avantis and Dimensional, differences that ultimately reflect alternative trade-offs between accounting precision and robustness rather than fundamentally different views on markets.

Investors often focus on the headline fee of a fund whilst overlooking the many other frictions that quietly erode returns. The Ongoing Charges Figure is only the starting point. Trading and transaction costs, platform fees, taxes, spreads, incentive structures and even investor behaviour all contribute to the true cost of ownership. Some of these costs are explicit and easy to measure, whilst others are embedded within performance and only reveal themselves over time. Understanding this wider cost ecosystem allows investors to minimise unnecessary frictions, pay consciously for genuine value and keep a greater share of the capital markets’ long term rewards.

Private markets span buyouts, venture capital, private credit and private real estate and have grown from niche allocations into large ecosystems with specialist managers and active secondary trading. Advocates often claim higher returns with lower volatility and low correlations vis-à-vis the public markets, yet results depend on how returns are measured, which benchmarks are chosen and how fees and carry flow through to what investors actually keep.

IRR can flatter early realisations, TVPI shows the multiple without timing, and public market equivalent asks whether the same cash flows would have matched a suitable public index. Once style is matched properly, much headline outperformance in buyouts compresses; venture capital offers a clearer diversification case; private credit behaves more like high yield than like defensive bonds. With dispersion high, persistence uncertain and capacity constrained, an edge in private markets is hard to get.