A U.S pension fund wants to invest $1 million in foreign equity. Its board of trustees must decide whether to invest in a commingled index fund tracking the EAFE index or to give the money to an active manager. The board learns that this active manager turns the portfolios over about twice a year. Given the small size of account, the transaction costs are likely to be an average of 1.5 percent of each transaction value. The active manager charges 0.75 percent in annual management fees, and the indexer charges 0.25 percent. By how much should the active manager outperform the index to covers the extra costs in the form of fees and transaction costs on the annual turnover?