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

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manlymatt83
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I would like to add a SCV tilt in International. What's the best ETF with low E.R.?

Post by manlymatt83 »

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

Post by vineviz »

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
Topic Author
manlymatt83
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Re: I would like to add a SCV tilt in International. What's the best ETF with low E.R.?

Post by manlymatt83 »

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

Post by MotoTrojan »

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

Post by MikeMak27 »

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.
Mak 3 fund portfolio: 50% US small cap value & US Small cap (IJS, IJR), 40% Emerging Markets (IEMG, VWO, FPADX), 10% US REIT (VNQ)
Jack FFR1846
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Re: I would like to add a SCV tilt in International. What's the best ETF with low E.R.?

Post by Jack FFR1846 »

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

Post by Longtermgrowth »

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

Post by caklim00 »

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

Post by whodidntante »

I suggest going multifactor with ISCF rather than FNDC. Or IVLU iShares Edge MSCI Intl Value Factor ETF paired with VSS.
OldSport
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Re: I would like to add a SCV tilt in International. What's the best ETF with low E.R.?

Post by OldSport »

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

Post by HEDGEFUNDIE »

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

Post by MotoTrojan »

whodidntante wrote: 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.
Yes, revising an old thread, but curious your reason for ISCF > FNDC?
CRTR
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Re: I would like to add a SCV tilt in International. What's the best ETF with low E.R.?

Post by CRTR »

here's another thread that discusses this and goes over some of the trading issues when investing in this market segment:

viewtopic.php?f=1&t=295860&sid=4f6ebf02 ... 8e6c0388bf
caklim00
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Re: I would like to add a SCV tilt in International. What's the best ETF with low E.R.?

Post by caklim00 »

MotoTrojan wrote: Tue Nov 26, 2019 2:34 pm
whodidntante wrote: 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.
Yes, revising an old thread, but curious your reason for ISCF > FNDC?
I actually switched from FNDC to ISCF in my IRAs earlier this year. I spent some time reading through the MSCI multifactor documents and then seeing that ISCF has tracked it well minus its .4 ER I decided to make the jump. I don't plan on moving from ISCF to AVDV anytime soon, but plan on putting new contributions towards AVDV instead.
MotoTrojan
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Re: I would like to add a SCV tilt in International. What's the best ETF with low E.R.?

Post by MotoTrojan »

caklim00 wrote: Wed Nov 27, 2019 9:38 am
MotoTrojan wrote: Tue Nov 26, 2019 2:34 pm
whodidntante wrote: 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.
Yes, revising an old thread, but curious your reason for ISCF > FNDC?
I actually switched from FNDC to ISCF in my IRAs earlier this year. I spent some time reading through the MSCI multifactor documents and then seeing that ISCF has tracked it well minus its .4 ER I decided to make the jump. I don't plan on moving from ISCF to AVDV anytime soon, but plan on putting new contributions towards AVDV instead.
I’ll have to dig a bit more, any links/suggestions on the MSCI multi factor documentation? I enjoyed the documentation on FNDC’s RAFI index. Sounds like a nice pair with AVDV’s deeper value/size exposure.

EDIT: Pimco had some interesting offerings that seemed to combine the multi-factor approach with the RAFI fundamental weighting; I won't be using their products but still interesting none-the-less.

I like ISCF's smaller market-cap and lower concentration in Japan, but something about the RAFI weighting (buy low sell high) is appealing too. These are all just feelings of course... Seems either would be a good way to get some exposure to small-international developed with a value tilt, especially with some AVDV thrown in the mix.
caklim00
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Re: I would like to add a SCV tilt in International. What's the best ETF with low E.R.?

Post by caklim00 »

MotoTrojan wrote: Wed Nov 27, 2019 9:44 am
caklim00 wrote: Wed Nov 27, 2019 9:38 am
MotoTrojan wrote: Tue Nov 26, 2019 2:34 pm
whodidntante wrote: 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.
Yes, revising an old thread, but curious your reason for ISCF > FNDC?
I actually switched from FNDC to ISCF in my IRAs earlier this year. I spent some time reading through the MSCI multifactor documents and then seeing that ISCF has tracked it well minus its .4 ER I decided to make the jump. I don't plan on moving from ISCF to AVDV anytime soon, but plan on putting new contributions towards AVDV instead.
I’ll have to dig a bit more, any links/suggestions on the MSCI multi factor documentation? I enjoyed the documentation on FNDC’s RAFI index. Sounds like a nice pair with AVDV’s deeper value/size exposure.

EDIT: Pimco had some interesting offerings that seemed to combine the multi-factor approach with the RAFI fundamental weighting; I won't be using their products but still interesting none-the-less.

I like ISCF's smaller market-cap and lower concentration in Japan, but something about the RAFI weighting (buy low sell high) is appealing too. These are all just feelings of course... Seems either would be a good way to get some exposure to small-international developed with a value tilt, especially with some AVDV thrown in the mix.
https://www.msci.com/msci-diversified-m ... or-indexes

From there here is the pdf that corresponds to ISCF: https://www.msci.com/documents/10199/8f ... 798db32f38

I liked the idea of SMLF on the US side, but keep getting told by everyone that VFMF has more pure factor exposure (except for small) and SLYV/VIOV is cheaper plus the bid/ask on SMLF feels more like buying international small so I haven't used any of SMLF.
DesertInvestor
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Re: I would like to add a SCV tilt in International. What's the best ETF with low E.R.?

Post by DesertInvestor »

Longtermgrowth wrote: 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.
I'm currently 30% international, 5% VSS. Is it reasonable to add another 5% DLS or iShares Edge MSCI Multifactor Intl Small-Cap ETF? ishares seems cheaper, but not sure about either one honestly.
Longtermgrowth
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Re: I would like to add a SCV tilt in International. What's the best ETF with low E.R.?

Post by Longtermgrowth »

DesertInvestor wrote: Thu Nov 28, 2019 11:26 am I'm currently 30% international, 5% VSS. Is it reasonable to add another 5% DLS or iShares Edge MSCI Multifactor Intl Small-Cap ETF? ishares seems cheaper, but not sure about either one honestly.
It would at least give a slight value (probably less value with ISCF) and more small cap tilt.

If currently holding a total international fund along with VSS, one consideration would be that both ISCF and DLS are developed market funds, so adding either at 5% would slightly underweight emerging markets.
DesertInvestor
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Re: I would like to add a SCV tilt in International. What's the best ETF with low E.R.?

Post by DesertInvestor »

I'm assuming VSS has zero emerging markets?
stan1
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Re: I would like to add a SCV tilt in International. What's the best ETF with low E.R.?

Post by stan1 »

DesertInvestor wrote: Thu Nov 28, 2019 2:18 pm I'm assuming VSS has zero emerging markets?
It does have emerging markets (21% plus right now).

https://investor.vanguard.com/etf/profile/portfolio/vss
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Longtermgrowth
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Re: I would like to add a SCV tilt in International. What's the best ETF with low E.R.?

Post by Longtermgrowth »

DesertInvestor wrote: Thu Nov 28, 2019 2:18 pm I'm assuming VSS has zero emerging markets?
VSS includes emerging markets. It's basically a total international small cap fund: https://investor.vanguard.com/etf/profile/portfolio/vss

Edit: Stan1 beat me to it!
DesertInvestor
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Re: I would like to add a SCV tilt in International. What's the best ETF with low E.R.?

Post by DesertInvestor »

So I would not necessarily be diluting emerging markets very much adding 5% VSS with additional 5% of DLS or the ishares small value?
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nedsaid
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Re: I would like to add a SCV tilt in International. What's the best ETF with low E.R.?

Post by nedsaid »

There are two pretty good International Small Cap Value ETFs that are out there. One is Wisdom Tree International Small Cap Dividend (DLS) and Avantis International Small Cap Value (AVDV). Avantis is a new venture by American Century Investments which is a mini Dimensional Fund Advisors, indeed Avantis has hired a lot of DFA employees. DLS has an expense ratio of 0.58% and AVDV has an ER of 0.36%.
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