I would like to add a SCV tilt in International. What's the best ETF with low E.R.?

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
mjuszczak
Posts: 33
Joined: Tue Jan 30, 2018 8:23 am

I would like to add a SCV tilt in International. What's the best ETF with low E.R.?

Post by mjuszczak » Tue Aug 14, 2018 12:08 pm

Currently Portfolio is:

39.1% Schwab U.S. Broad Market ($SCHB)
16% Schwab International Equity ($SCHF)
9.1% SPDR S&P 600 Small Cap Value ETF (based on S&P SmallCap Value Index--symbol--CVK ($SLYV)
6.2% Invesco S&P Smallcap 600 Pure Value ($RZV)
6.1% iShares Edge MSCI USA Momentum Factor ($MTUM)
5% Schwab US Aggregate Bond ($SCHZ)
5% Realty Income Corporation $(O)
5% Schwab U.S. REIT ($SCHH)
4.9% Schwab International Small-Cap Equity ($SCHC)
3.9% Schwab Emerging Markets Equity ($SCHE)

I am happy with my bond allocation and US / International split. I typically look for aggressive at this age (34) but want REIT exposure as well as a small cap value tilt.

I fear my ~25% International Exposure has a small cap blend exposure, but no value tilt. Was wondering if others have favorites to give me that tilt, perhaps replacing my 4.9% Schwab International Small-Cap Equity ($SCHC) exposure.

I know people are, for example, $VSS fans, but that also doesn't seem to have a SCV tilt.

In looking at Paul Merriman's M1 site (https://paulmerriman.com/m1-finance/), he has a few portfolios which seem to include $DLS and $EWX, which have .58% E.R. and .65% E.R. respectively -- perhaps a little too high for my tastes unless the exposure at a small scale is worth it.

Thanks for any thoughts!

User avatar
vineviz
Posts: 1311
Joined: Tue May 15, 2018 1:55 pm

Re: I would like to add a SCV tilt in International. What's the best ETF with low E.R.?

Post by vineviz » Tue Aug 14, 2018 12:47 pm

mjuszczak wrote:
Tue Aug 14, 2018 12:08 pm
Currently Portfolio is:

39.1% Schwab U.S. Broad Market ($SCHB)
16% Schwab International Equity ($SCHF)
9.1% SPDR S&P 600 Small Cap Value ETF (based on S&P SmallCap Value Index--symbol--CVK ($SLYV)
6.2% Invesco S&P Smallcap 600 Pure Value ($RZV)
6.1% iShares Edge MSCI USA Momentum Factor ($MTUM)
5% Schwab US Aggregate Bond ($SCHZ)
5% Realty Income Corporation $(O)
5% Schwab U.S. REIT ($SCHH)
4.9% Schwab International Small-Cap Equity ($SCHC)
3.9% Schwab Emerging Markets Equity ($SCHE)

I am happy with my bond allocation and US / International split. I typically look for aggressive at this age (34) but want REIT exposure as well as a small cap value tilt.

I fear my ~25% International Exposure has a small cap blend exposure, but no value tilt. Was wondering if others have favorites to give me that tilt, perhaps replacing my 4.9% Schwab International Small-Cap Equity ($SCHC) exposure.

I know people are, for example, $VSS fans, but that also doesn't seem to have a SCV tilt.

In looking at Paul Merriman's M1 site (https://paulmerriman.com/m1-finance/), he has a few portfolios which seem to include $DLS and $EWX, which have .58% E.R. and .65% E.R. respectively -- perhaps a little too high for my tastes unless the exposure at a small scale is worth it.

Thanks for any thoughts!
My main thought is that if you follow Merriman you're going to end up with too many funds and STILL waste time looking for that elusive fund to fit the tiniest niche. You could build a portfolio with substantially identical risk exposures to the one above with half the number of ETFs you already hold.

But to answer your question, I think using VSS (Vanguard FTSE All-Wld ex-US SmCp ETF) or ISCF (iShares Edge MSCI Mltfct Intl SmCp ETF) are probably as good as it gets for for international small cap. However, in a diversified portfolio SCHC will probably do just as well.
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch

mjuszczak
Posts: 33
Joined: Tue Jan 30, 2018 8:23 am

Re: I would like to add a SCV tilt in International. What's the best ETF with low E.R.?

Post by mjuszczak » Tue Aug 14, 2018 12:52 pm

Thanks! I didn’t make this portfolio with Merriman in mind. But I’ve been reading his stuff as of late.

My portfolio used to be at Schwab and their traditional Intl exposure requires 3 ETFs from what I had originally read - hence SCHF, SCHZ and SCHE. When I moved this to M1 I just kept them and never thought to combine them, but I’m open to doing that if the E.R. makes sense.

Otherwise, O and SCHH are just my REIT exposure. I like O otherwise I would’ve just gone 10% SCHH. And then there’s bonds.

I only recently added RZV but I’ve had SLYV for a while for domestic small cap value exposure. I had just also hoped to tilt internationally as well. Do you know if VSS has more SCV tilt than SCHC? I assume I’d only hold one of those.

MotoTrojan
Posts: 2118
Joined: Wed Feb 01, 2017 8:39 pm

Re: I would like to add a SCV tilt in International. What's the best ETF with low E.R.?

Post by MotoTrojan » Tue Aug 14, 2018 12:56 pm

I agree this is way too complicated.

Is this a taxable account? SLYV has the lowest ER of the bunch, but throws off a lot of capital-gains distributions compared to VIOV (20bp) and IJS (25bp) which also follow the same index and are very tax-efficient.

If in an IRA, SLYV is a great choice for S&P600 Value exposure. I personally use VIOV across the board.

MikeMak27
Posts: 101
Joined: Fri Jul 03, 2015 4:37 am

Re: I would like to add a SCV tilt in International. What's the best ETF with low E.R.?

Post by MikeMak27 » Tue Aug 14, 2018 1:04 pm

I like ishares SCZ for Small cap international. It has a newly lowered 0.39% expense ratio, good liquidity / bidask spreads, and has beaten the socks off of VSS since inception.
Mac 4 fund portfolio: 45% US small cap value (IJS, VBR), 40% Emerging Markets (IEMG, VWO, FPMAX), 10% long term US treasuries (TLT), 5% US REITS (VNQ)

Jack FFR1846
Posts: 7643
Joined: Tue Dec 31, 2013 7:05 am

Re: I would like to add a SCV tilt in International. What's the best ETF with low E.R.?

Post by Jack FFR1846 » Tue Aug 14, 2018 1:11 pm

I like Paul's approach a lot. He calculates like he's an engineer. His precision rivals anyone out there that I've seen. He seems able to figure out the perfect portfolio down to the 1 cent graticule.

Then his portfolio is put up against 9 others and comes in last.

I'll stick with my 3 fund.
Bogle: Smart Beta is stupid

Longtermgrowth
Posts: 546
Joined: Thu Nov 26, 2015 1:59 pm

Re: I would like to add a SCV tilt in International. What's the best ETF with low E.R.?

Post by Longtermgrowth » Tue Aug 14, 2018 1:49 pm

I like Paul Merriman's recommendations for international small value. Along with DLS, DGS (WisdomTree Emerging Markets SmallCap Dividend Fund) is another option some use, but it's ER is very close to EWX.
I currently hold DLS, DGS and VSS.

MikeMak27 wrote:
Tue Aug 14, 2018 1:04 pm
I like ishares SCZ for Small cap international. It has a newly lowered 0.39% expense ratio, good liquidity / bidask spreads, and has beaten the socks off of VSS since inception.
SCZ holds developed small caps excluding Canada, and VSS includes Canada along with emerging markets. Their performance will vary greatly over time due to the different country allocations.

caklim00
Posts: 1722
Joined: Mon May 26, 2008 10:09 am

Re: I would like to add a SCV tilt in International. What's the best ETF with low E.R.?

Post by caklim00 » Tue Aug 14, 2018 4:35 pm

I hold FNDC/SFILX (used to hold DLS before FNDC was available), DGS, and VSS. You can argue that FNDC and DGS are Value tilted. You can't argue that for VSS which is just cap weight.

User avatar
whodidntante
Posts: 3940
Joined: Thu Jan 21, 2016 11:11 pm

Re: I would like to add a SCV tilt in International. What's the best ETF with low E.R.?

Post by whodidntante » Tue Aug 14, 2018 11:16 pm

I suggest going multifactor with ISCF rather than FNDC. Or IVLU iShares Edge MSCI Intl Value Factor ETF paired with VSS.

OldSport
Posts: 309
Joined: Tue Jul 25, 2017 7:01 pm

Re: I would like to add a SCV tilt in International. What's the best ETF with low E.R.?

Post by OldSport » Wed Aug 15, 2018 12:45 am

Jack FFR1846 wrote:
Tue Aug 14, 2018 1:11 pm
I like Paul's approach a lot. He calculates like he's an engineer. His precision rivals anyone out there that I've seen. He seems able to figure out the perfect portfolio down to the 1 cent graticule.

Then his portfolio is put up against 9 others and comes in last.

I'll stick with my 3 fund.
Where is this that his portfolio comes in last against 9 others? I like his approach but disagree with his ratios. Paul has a lot of International.

HEDGEFUNDIE
Posts: 653
Joined: Sun Oct 22, 2017 2:06 pm

Re: I would like to add a SCV tilt in International. What's the best ETF with low E.R.?

Post by HEDGEFUNDIE » Wed Aug 15, 2018 12:54 am

OldSport wrote:
Wed Aug 15, 2018 12:45 am
Jack FFR1846 wrote:
Tue Aug 14, 2018 1:11 pm
I like Paul's approach a lot. He calculates like he's an engineer. His precision rivals anyone out there that I've seen. He seems able to figure out the perfect portfolio down to the 1 cent graticule.

Then his portfolio is put up against 9 others and comes in last.

I'll stick with my 3 fund.
Where is this that his portfolio comes in last against 9 others? I like his approach but disagree with his ratios. Paul has a lot of International.
25% is not “a lot of international”. Market weight is close to 50%.

And Jack, feel free to stick to your 3 fund, but automatically assuming you’re getting better risk adjusted returns than Paul is unfounded. He is tilting to size, value, and momentum, and there is plenty of research that backs him up on each of those factors. And he’s doing it using low cost index funds.

Post Reply