ultimate all-value portfolio using Vanguard

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dboone
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ultimate all-value portfolio using Vanguard

Post by dboone » Fri Jan 12, 2018 8:41 am

I am a fan of Paul Merriman's investing articles, and I want to use his "Ultimate All-Value Equity Portfolio" in my Vanguard account. This is the breakdown:

25% U.S. large value
25% U.S. small value
20% international large value
20% international small value
10% emerging markets value.

He does not list the Vanguard funds that would hit these targets, probably because Vanguard does not offer the specific funds that cleanly match the categories. I'd like to stay with Vanguard funds, not ETFs, and I am looking for advice on which funds would get me close to this all-value portfolio. Thanks!

Longtermgrowth
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Re: ultimate all-value portfolio using Vanguard

Post by Longtermgrowth » Fri Jan 12, 2018 8:54 pm

If not willing to use ETFs, the best I can find is this page on Vanguard mutual funds: https://paulmerriman.com/vanguard/

It looks like you can just select the value funds from the list, and get to all value except for international small caps. The best Vanguard does there is the blend fund VFSVX (Vanguard FTSE All-World ex-US Small Cap Index). That fund is cheaper as an ETF though.

So VVIAX (Vanguard Value Index Admiral Shares) for large value, VSIAX (Vanguard Small-Cap Value Index Admiral Shares)for small value, then VTRIX (Vanguard International Value) for both developed and emerging large value, though that fund alone may not include enough emerging markets for your taste. Vanguards site says as of 11/30/17, it had 15.7% emerging markets. The only solution there is to add some VEMAX (Vanguard Emerging Mkts Stock Index Admiral Shares). Then of course VFSVX (Vanguard FTSE All-World ex-US Small Cap Index) for international developed and emerging small blend.

Also note that VSIAX, 3,642 Mil, has around double the average market cap of an S&P 600 value ETF like VIOV, 1,599 Mil, (Vanguard S&P Small-Cap 600 Value ETF). So domestic small value may be better achieved by opting for the ETF, or possibly allocating a higher percentage to VSIAX if you otherwise would have gone with an S&P 600 value ETF...

Hope that helps some :sharebeer

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grabiner
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Re: ultimate all-value portfolio using Vanguard

Post by grabiner » Fri Jan 12, 2018 9:51 pm

Welcome to the forum!

Is this a taxable or a tax-deferred account? In a taxable account, you don't want to use Vanguard International Value, and even in a tax-deferred account, it isn't strongly biased towards value; you might use a non-Vanguard value ETF. For international small-cap and emerging markets, Vanguard has no value funds or ETFs, so you'll have to use non-Vanguard ETFs.

I would suggest using the fund screener at http://www.etf.com/etfanalytics/etf-finder to compare ETF choices.
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Jags4186
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Re: ultimate all-value portfolio using Vanguard

Post by Jags4186 » Fri Jan 12, 2018 10:04 pm

Vanguard does offer VEVFX International Explorer Value but it is an actively managed International Small Cap Value fund. It is much smaller than the International Small Cap index fund but still leans towards blend. For what it's worth it has outperformed DFA's Int'l Small Cap Value Fund by over 3%/yr since it's inception in 2011.

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nisiprius
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Re: ultimate all-value portfolio using Vanguard

Post by nisiprius » Fri Jan 12, 2018 10:08 pm

25% U.S. large value -- obvious choice would be the Vanguard Value Index Fund, VIVAX / VVIAX / VTV . They didn't call it large value because people weren't so interested in mid-caps or small-caps then.

25% U.S. small value -- obvious choice would be Vanguard Small-cap Value Index Fund, VISVX / VSIAX / VBR

For the others, I didn't know off the top of my head so I went into the funds list and applied these filters, but saw nothing useful.

Image

The Vanguard International Value fund, VTRIX, is not an index fund... and Morningstar classifies it as "large blend."
Similarly, the Vanguard International Explorer Value Fund, VEVFX, despite its name, is classified by Morningstar as "small blend."
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Longtermgrowth
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Re: ultimate all-value portfolio using Vanguard

Post by Longtermgrowth » Fri Jan 12, 2018 10:14 pm

grabiner wrote:
Fri Jan 12, 2018 9:51 pm
Is this a taxable or a tax-deferred account? In a taxable account, you don't want to use Vanguard International Value, and even in a tax-deferred account, it isn't strongly biased towards value; you might use a non-Vanguard value ETF.
I like Mr. Merriman's more recent recommendation for international large value, if sticking with Vanguard ETFs, of VYMI (Vanguard International High Dividend Yield ETF). It is also available as a mutual fund, but the mutual fund has a purchase and redemption fee of 0.25%...

Does that ETF look any better for a taxable account over Vanguard International Value?

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