$VTI vs $VFMF question

[manlymatt83]

For my US allocation, I have 20% $SLYV and 80% $VTI. I am happy with this. However, I would also like to have $VFMF as part of my allocation. While I have read that $VFMF can replace $VTI as a core holding, can you hold both $VFMF and $VTI at the same time, or is there so much overlap at that point it becomes a more expensive index fund? Also, does having $SLYV change that even further?

[luminous]

You will receive more replies and more thoughtful replies by listing the actual fund names.

I'm not sure what advice you are looking for that you didn't already get in your last thread: viewtopic.php?f=1&t=294249&p=4826368

[annu]

VFMF, https://investor.vanguard.com/etf/profile/VFMF
Look how it has performed compared to vti,

https://www.portfoliovisualizer.com/bac ... ion2_2=100


1) Both time when market went down, VFMF followed VTI
2) Both time VFMF lost more money, in other words had more drawdown
3) VFMF is managed fund, not index based, so composition can be same(as in it has stocks from different segments, Small, Mid and large), but it is not same as VTI.
4) It only holds 591 stocks, you can look at them @ https://investor.vanguard.com/etf/profi ... o-holdings
5) VTI holds more than 3500, https://investor.vanguard.com/etf/profi ... o-holdings

If you want to go with VFMF, please do, but consider it as a tilt or specialization, not replacement for VTI.

[manlymatt83]

You will receive more replies and more thoughtful replies by listing the actual fund names.

I'm not sure what advice you are looking for that you didn't already get in your last thread: viewtopic.php?f=1&t=294249&p=4826368

Thank you for the suggestion.

[manlymatt83]

VFMF, https://investor.vanguard.com/etf/profile/VFMF
Look how it has performed compared to vti,

https://www.portfoliovisualizer.com/bac ... ion2_2=100


1) Both time when market went down, VFMF followed VTI
2) Both time VFMF lost more money, in other words had more drawdown
3) VFMF is managed fund, not index based, so composition can be same(as in it has stocks from different segments, Small, Mid and large), but it is not same as VTI.
4) It only holds 591 stocks, you can look at them @ https://investor.vanguard.com/etf/profi ... o-holdings
5) VTI holds more than 3500, https://investor.vanguard.com/etf/profi ... o-holdings

If you want to go with VFMF, please do, but consider it as a tilt or specialization, not replacement for VTI.

Thank you for this information! My only outstanding question is essentially -- can I treat a portfolio of $VTI + $VFMF in the same way I treat $VTI + $SLYV... a "core" fund plus a tilt.

For example, it would be irrational to hold $SLYV and $MTUM and momentum stocks cancel out value stocks, and you're essentially left with (from what I understand) a "really expensive index fund".

So in this case, does $VFMF cancel out $SLYV often enough that it's not worth having both as a tilt?

[moneyman11]

One thing we know for certain about VFMF vs VTI is that VFMF will cost SIX TIMES as much to own.

Hopefully it’ll either get cheaper as more people buy it and/or it’ll outperform enough to dig out of that hole year after year.

Good luck with that.

[annu]

VFMF, https://investor.vanguard.com/etf/profile/VFMF
Look how it has performed compared to vti,

https://www.portfoliovisualizer.com/bac ... ion2_2=100


1) Both time when market went down, VFMF followed VTI
2) Both time VFMF lost more money, in other words had more drawdown
3) VFMF is managed fund, not index based, so composition can be same(as in it has stocks from different segments, Small, Mid and large), but it is not same as VTI.
4) It only holds 591 stocks, you can look at them @ https://investor.vanguard.com/etf/profi ... o-holdings
5) VTI holds more than 3500, https://investor.vanguard.com/etf/profi ... o-holdings

If you want to go with VFMF, please do, but consider it as a tilt or specialization, not replacement for VTI.

Thank you for this information! My only outstanding question is essentially -- can I treat a portfolio of $VTI + $VFMF in the same way I treat $VTI + $SLYV... a "core" fund plus a tilt.

For example, it would be irrational to hold $SLYV and $MTUM and momentum stocks cancel out value stocks, and you're essentially left with (from what I understand) a "really expensive index fund".

So in this case, does $VFMF cancel out $SLYV often enough that it's not worth having both as a tilt?

I dont think it is a simple yes or no. I will personally treat it as a new sector/segment to invest in, seorate from VTI, andbtrestbthe investment as reducing exposure to VTI and increasing in another segment that I feel strongly about. For e.g. peoplentilt to REITs, even though VTI already has reit exposure.

I personally looked into this a while ago, and biggestvreasonnwas infect vanguard is doing this, so probably makes sense, as they also pushed heavily for index funds, so there must be strong reason. But more I researched, it clearly stood out, if I replaced Vanguard with another vendor, I would bot buy this at all, too new, and relies on beating the market mindset....

I cannot answer better than this, but I do tilt towards small cap both us and world (vioo and vss) and value for voov( sp500 value), sorry too lazy to use full name, links .

Dont do this to beat market, as it is not proven that yet, but do this if you want to tilt or like this way of managed investing. Maybe allocate percentage of your investment to vfmf, and consider it as another segment/sector you are investing in, just like small cap value as you mentioned.

Best of luck.

[klaus14]

For my US allocation, I have 20% $SLYV and 80% $VTI. I am happy with this. However, I would also like to have $VFMF as part of my allocation. While I have read that $VFMF can replace $VTI as a core holding, can you hold both $VFMF and $VTI at the same time, or is there so much overlap at that point it becomes a more expensive index fund? Also, does having $SLYV change that even further?

Yes, there is no contradiction in VTI+VFMF. This is so because VTI is neutral. For example, in contrast, if you suggested, QQQ + VFMF, then that would be contradictory because QQQ has negative value load vs VFMF has positive so they just cancel each other and you pay extra fees for nothing.

And if you want factor tilts, i think VFMF is the best fund to achieve it. it's cheap, it's active, it's bottom up.

However think about if you really want small-value factor tilts. It's underperforming for a while. And there is a chance that it will keep underperforming due to secular trends (low growth/inflation/interest). I hold VFMF only because I work in tech sector (to hedge)

[manlymatt83]

For my US allocation, I have 20% $SLYV and 80% $VTI. I am happy with this. However, I would also like to have $VFMF as part of my allocation. While I have read that $VFMF can replace $VTI as a core holding, can you hold both $VFMF and $VTI at the same time, or is there so much overlap at that point it becomes a more expensive index fund? Also, does having $SLYV change that even further?

Yes, there is no contradiction in VTI+VFMF. This is so because VTI is neutral. For example, in contrast, if you suggested, QQQ + VFMF, then that would be contradictory because QQQ has negative value load vs VFMF has positive so they just cancel each other and you pay extra fees for nothing.

And if you want factor tilts, i think VFMF is the best fund to achieve it. it's cheap, it's active, it's bottom up.

However think about if you really want small-value factor tilts. It's underperforming for a while. And there is a chance that it will keep underperforming due to secular trends (low growth/inflation/interest). I hold VFMF only because I work in tech sector (to hedge)

Thank you! I also work in the tech sector!

Is SLYV and VFMF just the same thing then? Or is SLYV simply more of a tilt then VFMF?

[klaus14]

For my US allocation, I have 20% $SLYV and 80% $VTI. I am happy with this. However, I would also like to have $VFMF as part of my allocation. While I have read that $VFMF can replace $VTI as a core holding, can you hold both $VFMF and $VTI at the same time, or is there so much overlap at that point it becomes a more expensive index fund? Also, does having $SLYV change that even further?

Yes, there is no contradiction in VTI+VFMF. This is so because VTI is neutral. For example, in contrast, if you suggested, QQQ + VFMF, then that would be contradictory because QQQ has negative value load vs VFMF has positive so they just cancel each other and you pay extra fees for nothing.

And if you want factor tilts, i think VFMF is the best fund to achieve it. it's cheap, it's active, it's bottom up.

However think about if you really want small-value factor tilts. It's underperforming for a while. And there is a chance that it will keep underperforming due to secular trends (low growth/inflation/interest). I hold VFMF only because I work in tech sector (to hedge)

Thank you! I also work in the tech sector!

Is SLYV and VFMF just the same thing then? Or is SLYV simply more of a tilt then VFMF?

SLYV = small+value
VFMF = mid/small + value + quality + momentum

SLYV has larger small and value loads. And it doesn't mind having negative quality and momentum load.
VFMF has modest small and value loads to achieve also positive quality and momentum.

To counter balance exposure from tech sector you can use both. But i found VFMF to be a less riskier choice. i have a 50% tilt using VFMF. If I used SLYV, i would probably have a smaller tilt.

[manlymatt83]

For my US allocation, I have 20% $SLYV and 80% $VTI. I am happy with this. However, I would also like to have $VFMF as part of my allocation. While I have read that $VFMF can replace $VTI as a core holding, can you hold both $VFMF and $VTI at the same time, or is there so much overlap at that point it becomes a more expensive index fund? Also, does having $SLYV change that even further?

Yes, there is no contradiction in VTI+VFMF. This is so because VTI is neutral. For example, in contrast, if you suggested, QQQ + VFMF, then that would be contradictory because QQQ has negative value load vs VFMF has positive so they just cancel each other and you pay extra fees for nothing.

And if you want factor tilts, i think VFMF is the best fund to achieve it. it's cheap, it's active, it's bottom up.

However think about if you really want small-value factor tilts. It's underperforming for a while. And there is a chance that it will keep underperforming due to secular trends (low growth/inflation/interest). I hold VFMF only because I work in tech sector (to hedge)

Thank you! I also work in the tech sector!

Is SLYV and VFMF just the same thing then? Or is SLYV simply more of a tilt then VFMF?

SLYV = small+value
VFMF = mid/small + value + quality + momentum

SLYV has larger small and value loads. And it doesn't mind having negative quality and momentum load.
VFMF has modest small and value loads to achieve also positive quality and momentum.

To counter balance exposure from tech sector you can use both. But i found VFMF to be a less riskier choice. i have a 50% tilt using VFMF. If I used SLYV, i would probably have a smaller tilt.

Hmmm. Ok thanks! So In that case, is this sane for US?

70% $VTI
20% $VFMF
10% $SLYV

No counter-acting in that?

[klaus14]

For my US allocation, I have 20% $SLYV and 80% $VTI. I am happy with this. However, I would also like to have $VFMF as part of my allocation. While I have read that $VFMF can replace $VTI as a core holding, can you hold both $VFMF and $VTI at the same time, or is there so much overlap at that point it becomes a more expensive index fund? Also, does having $SLYV change that even further?

Yes, there is no contradiction in VTI+VFMF. This is so because VTI is neutral. For example, in contrast, if you suggested, QQQ + VFMF, then that would be contradictory because QQQ has negative value load vs VFMF has positive so they just cancel each other and you pay extra fees for nothing.

And if you want factor tilts, i think VFMF is the best fund to achieve it. it's cheap, it's active, it's bottom up.

However think about if you really want small-value factor tilts. It's underperforming for a while. And there is a chance that it will keep underperforming due to secular trends (low growth/inflation/interest). I hold VFMF only because I work in tech sector (to hedge)

Thank you! I also work in the tech sector!

Is SLYV and VFMF just the same thing then? Or is SLYV simply more of a tilt then VFMF?

SLYV = small+value
VFMF = mid/small + value + quality + momentum

SLYV has larger small and value loads. And it doesn't mind having negative quality and momentum load.
VFMF has modest small and value loads to achieve also positive quality and momentum.

To counter balance exposure from tech sector you can use both. But i found VFMF to be a less riskier choice. i have a 50% tilt using VFMF. If I used SLYV, i would probably have a smaller tilt.

Hmmm. Ok thanks! So In that case, is this sane for US?

70% $VTI
20% $VFMF
10% $SLYV

No counter-acting in that?

VFMF and SLYV is a bit contradictory. VFMF has positive quality + momentum vs SLYV has negative. Pick one of them.

[manlymatt83]

Yes, there is no contradiction in VTI+VFMF. This is so because VTI is neutral. For example, in contrast, if you suggested, QQQ + VFMF, then that would be contradictory because QQQ has negative value load vs VFMF has positive so they just cancel each other and you pay extra fees for nothing.

And if you want factor tilts, i think VFMF is the best fund to achieve it. it's cheap, it's active, it's bottom up.

However think about if you really want small-value factor tilts. It's underperforming for a while. And there is a chance that it will keep underperforming due to secular trends (low growth/inflation/interest). I hold VFMF only because I work in tech sector (to hedge)

Thank you! I also work in the tech sector!

Is SLYV and VFMF just the same thing then? Or is SLYV simply more of a tilt then VFMF?

SLYV = small+value
VFMF = mid/small + value + quality + momentum

SLYV has larger small and value loads. And it doesn't mind having negative quality and momentum load.
VFMF has modest small and value loads to achieve also positive quality and momentum.

To counter balance exposure from tech sector you can use both. But i found VFMF to be a less riskier choice. i have a 50% tilt using VFMF. If I used SLYV, i would probably have a smaller tilt.

Hmmm. Ok thanks! So In that case, is this sane for US?

70% $VTI
20% $VFMF
10% $SLYV

No counter-acting in that?

VFMF and SLYV is a bit contradictory. VFMF has positive quality + momentum vs SLYV has negative. Pick one of them.

Even though they live in different market caps and VFMF is more actively managed?

[MotoTrojan]

Yes you can consider it a tilt to value. If ER is a concern I would probably not hold SLYV as well. SLYV should have more exposure to small, but VFMF will best expose the change factor, hence why it has done the worst of the 3 lately.

I don’t think holding all three would be outlandish.

[klaus14]

Thank you! I also work in the tech sector!

Is SLYV and VFMF just the same thing then? Or is SLYV simply more of a tilt then VFMF?

SLYV = small+value
VFMF = mid/small + value + quality + momentum

SLYV has larger small and value loads. And it doesn't mind having negative quality and momentum load.
VFMF has modest small and value loads to achieve also positive quality and momentum.

To counter balance exposure from tech sector you can use both. But i found VFMF to be a less riskier choice. i have a 50% tilt using VFMF. If I used SLYV, i would probably have a smaller tilt.

Hmmm. Ok thanks! So In that case, is this sane for US?

70% $VTI
20% $VFMF
10% $SLYV

No counter-acting in that?

VFMF and SLYV is a bit contradictory. VFMF has positive quality + momentum vs SLYV has negative. Pick one of them.

Even though they live in different market caps and VFMF is more actively managed?

Yes.
VFMF is still 1/3 small caps.
its active management is just that they can buy/sell stocks anytime to keep factor loads vs SLYV follows an index that's updated every 6 month or something.

[manlymatt83]

OK, thank you. I will probably stick with my current VFMF allocation but not add to it, and continue adding to SLYV. Thanks.