Ex DFA CIO launches competitor which will also have ETFs

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larryswedroe
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Ex DFA CIO launches competitor which will also have ETFs

Post by larryswedroe » Wed Jun 26, 2019 2:28 pm

https://riabiz.com/a/2019/6/26/former-d ... year-round

Whatever side your own, this is good news, bringing more competition to the space and hopefully lower costs--and also now more access for investors

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Re: Ex DFA CIO launches competitor which will also have ETFs

Post by Svensk Anga » Wed Jun 26, 2019 5:42 pm

The linked article says that the new venture has filed to launch an international small cap value etf. I think this is not readily available elsewhere.

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Re: Ex DFA CIO launches competitor which will also have ETFs

Post by larryswedroe » Wed Jun 26, 2019 6:10 pm

Svenksa, that is exactly why IMO they are launching it!

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Re: Ex DFA CIO launches competitor which will also have ETFs

Post by Random Walker » Wed Jun 26, 2019 8:17 pm

This one example brings up some more general issues regarding the evolution of investing. Competition certainly increases the accessibility of the various sources of risk/return and decreases cost. But the more accessible, lower cost, more liquid the investment, the lower expected return. Low cost funds increase demand, increased demand results in stock prices getting bid up, and expected returns lowered. Even if the new lower cost fund represents purely a unique risk premium, the expected return can take a haircut. Perhaps Vanguard has had that effect on the equity risk premium?

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Re: Ex DFA CIO launches competitor which will also have ETFs

Post by JoMoney » Wed Jun 26, 2019 8:51 pm

DFA seemed to try to be "index like" without actually tracking an index, giving them more wiggle room in how they traded... they also seemed to like forcing individual investors to go through an adviser, perhaps to talk them down from trading and put up roadblocks in times of crisis...
This makes me wonder how ETF's in narrow thinly traded segments of the market like 'small value' stocks will hold up in a big down-turn. People have already raised concerns about the way ETF's can amplify liquidity problems: where the ETF's liquidity dries up and trades at a discount to (quoted) NAV of the stocks it holds (which may be stale prices if liquidity isn't there). Eventually the discounted spread gets high enough that a 'Authorized Participant' steps in to arbitrage, but in the process of redeeming an ETF they will also liquidate the underlying stocks, depressing the ETF's NAV that was already trading at a 'discount'... creating a vicious circle in already depressed stocks with poor liquidity.
It will be interesting to see how all this washes out in a downturn.
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Re: Ex DFA CIO launches competitor which will also have ETFs

Post by fennewaldaj » Wed Jun 26, 2019 9:10 pm

I am excited about the international small cap value fund as the only real options now are fundamental (RAFI) indexes or dividend weighted funds. The same is true of EM value so may be they will launch something in that space too.

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Re: Ex DFA CIO launches competitor which will also have ETFs

Post by caklim00 » Wed Jun 26, 2019 9:27 pm

I doubt I'll be moving from ISCF, but its good to see some competition. I better look back at this post in a few years.

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Re: Ex DFA CIO launches competitor which will also have ETFs

Post by Angst » Wed Jun 26, 2019 9:42 pm

fennewaldaj wrote:
Wed Jun 26, 2019 9:10 pm
I am excited about the international small cap value fund as the only real options now are fundamental (RAFI) indexes or dividend weighted funds. The same is true of EM value so may be they will launch something in that space too.
+1
Thanks for posting Larry, and please keep us informed as you assess their eventual ETF launches. :)

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Re: Ex DFA CIO launches competitor which will also have ETFs

Post by stan1 » Wed Jun 26, 2019 10:19 pm

caklim00 wrote:
Wed Jun 26, 2019 9:27 pm
I doubt I'll be moving from ISCF, but its good to see some competition. I better look back at this post in a few years.
If they come in under ISCF on expense ratio? Unlikely I think but ..... it's also American Century who has deep pockets and some catching up to do now that active ETFs are a thing but a long history of 100 plus basis point expense ratios so who knows what they will try to do?
Last edited by stan1 on Wed Jun 26, 2019 10:34 pm, edited 1 time in total.

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Re: Ex DFA CIO launches competitor which will also have ETFs

Post by sperry8 » Wed Jun 26, 2019 10:32 pm

Svensk Anga wrote:
Wed Jun 26, 2019 5:42 pm
The linked article says that the new venture has filed to launch an international small cap value etf. I think this is not readily available elsewhere.
Definitely interested in this new ETF when it becomes available. I wonder if it will perform similarly to DFA's competing fund?
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DFA Alumni open new Fund Company offering ETFs

Post by Helot » Wed Jun 26, 2019 10:38 pm

Just read that former DFA executives have opened a new outfit called Avantis Investors that will offer ETFs to compete with DFA’s mutual find line-up. This may be of interest to those still on the lookout for investments that capture factors in the manner of DFA.

Initial offerings will include: US Equity, International Equity, Emerging Markets Equity, US SCV, International SCV.


https://www.avantisinvestors.com


....... Just noticed that Larry Swedroe has already posted on this ..... Tried to delete my post, but apparently I lack the authority. My apologies for the duplication.
Last edited by Helot on Thu Jun 27, 2019 6:07 pm, edited 1 time in total.

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Re: Ex DFA CIO launches competitor which will also have ETFs

Post by jbranx » Wed Jun 26, 2019 10:54 pm

{I merged a similar post into this thread}

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Re: Ex DFA CIO launches competitor which will also have ETFs

Post by Longtermgrowth » Thu Jun 27, 2019 5:58 pm

Very cool! Competitively priced DFA ETFs are what I've been wishing for :happy

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Re: Ex DFA CIO launches competitor which will also have ETFs

Post by caklim00 » Thu Jun 27, 2019 6:27 pm

stan1 wrote:
Wed Jun 26, 2019 10:19 pm
caklim00 wrote:
Wed Jun 26, 2019 9:27 pm
I doubt I'll be moving from ISCF, but its good to see some competition. I better look back at this post in a few years.
If they come in under ISCF on expense ratio? Unlikely I think but ..... it's also American Century who has deep pockets and some catching up to do now that active ETFs are a thing but a long history of 100 plus basis point expense ratios so who knows what they will try to do?
You are truly an optimist if you think this is going to be below .4.

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Re: Ex DFA CIO launches competitor which will also have ETFs

Post by asset_chaos » Thu Jun 27, 2019 7:44 pm

caklim00 wrote:
Thu Jun 27, 2019 6:27 pm
stan1 wrote:
Wed Jun 26, 2019 10:19 pm
caklim00 wrote:
Wed Jun 26, 2019 9:27 pm
I doubt I'll be moving from ISCF, but its good to see some competition. I better look back at this post in a few years.
If they come in under ISCF on expense ratio? Unlikely I think but ..... it's also American Century who has deep pockets and some catching up to do now that active ETFs are a thing but a long history of 100 plus basis point expense ratios so who knows what they will try to do?
You are truly an optimist if you think this is going to be below .4.
Early this year ROGS (Hartford Multifactor Global SmallCap ETF) lowered its expense ratio to 0.39---and that's for global small, value, quality. If Hartford can do global multifactor for under 0.4, then American Century can probably do it also---if they choose to. On on hand, the Avantis webpage explicitly says low fees and costs are important. On the other hand, that we're supposed to be happy that a chunk of $200 million plus a year profits goes into biomedical research, suggests that they may not pursue the lowest price strategy. But enough of reading tea leaves. They say they'll launch in a few months; then we'll know.
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Re: Ex DFA CIO launches competitor which will also have ETFs

Post by jhfenton » Thu Jun 27, 2019 8:38 pm

Here is a link to the SEC filing. The prospectuses and Statements of Additional Information are in the linked document. There are no expense ratios given yet. The proposed effective date is September 9, 2019.

There are five funds in the filing:

Avantis™ Emerging Markets Equity ETF - AVEM
Avantis™ International Equity ETF - AVDE
Avantis™ International Small Cap Value ETF - AVDV
Avantis™ U.S. Equity ETF - AVUS
Avantis™ U.S. Small Cap Value ETF - AVUV

I'm also skeptical that the funds will be truly low-cost, given their sponsor.

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Re: Ex DFA CIO launches competitor which will also have ETFs

Post by fennewaldaj » Thu Jun 27, 2019 9:09 pm

jhfenton wrote:
Thu Jun 27, 2019 8:38 pm

I'm also skeptical that the funds will be truly low-cost, given their sponsor.
my baseline expectation is that they will be similar in cost to the DFA funds they are similar too. So cheaper than active but not Vanguard cheap. The DFA international small cap value fund ER is 0.68

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Re: Ex DFA CIO launches competitor which will also have ETFs

Post by Theoretical » Thu Jun 27, 2019 10:01 pm

That explicitly ISV fund could get a bunch of assets quickly if it undercuts DFA.

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Re: Ex DFA CIO launches competitor which will also have ETFs

Post by fennewaldaj » Thu Jun 27, 2019 11:32 pm

asset_chaos wrote:
Thu Jun 27, 2019 7:44 pm

Early this year ROGS (Hartford Multifactor Global SmallCap ETF) lowered its expense ratio to 0.39---and that's for global small, value, quality. If Hartford can do global multifactor for under 0.4, then American Century can probably do it also---if they choose to. On on hand, the Avantis webpage explicitly says low fees and costs are important. On the other hand, that we're supposed to be happy that a chunk of $200 million plus a year profits goes into biomedical research, suggests that they may not pursue the lowest price strategy. But enough of reading tea leaves. They say they'll launch in a few months; then we'll know.
I was unaware of this fund. It looks interesting as international small cap value. You do get some expensive US small value too though. The EM fund ROAM in by them looks interesting too due to different country weights.

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Re: Ex DFA CIO launches competitor which will also have ETFs

Post by larryswedroe » Fri Jun 28, 2019 7:43 am

FWIW I expect the ERs will be below, and maybe in some cases well below DFAs. With perhaps deeper tilts. So more loading per unit of cost.
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Re: Ex DFA CIO launches competitor which will also have ETFs

Post by lazyday » Fri Jun 28, 2019 9:24 am

larryswedroe wrote:
Fri Jun 28, 2019 7:43 am
....perhaps deeper tilts. So more loading per unit of cost.
That sounds appealing. Might allow one to keep the same portfolio factor loading while owning more of Vanguard’s funds, or to go deeper into a “Larry Portfolio” by increasing factor load and reducing the equity %.
jhfenton wrote:
Thu Jun 27, 2019 8:38 pm
the SEC filing
Avantis™ Emerging Markets Equity ETF AVEM

.... enhanced emphasis on securities of companies with smaller market capitalizations and securities of companies it defines as high profitability or value companies. …. may also consider other factors when selecting securities including, industry classifications, the past performance of the security relative to other securities, its liquidity, its float, and tax, governance or costs considerations, among others
does not seek to replicate the performance of a specified index …. When buying or selling a security, the portfolio managers may consider the trade-off between expected returns of the security and implementation or tax costs of the trade in an attempt to gain trading efficiencies, avoid unnecessary risk, and enhance fund performance.
Among index funds I’ve looked at with at least a few years of data, all EM factor/multifactor funds and some international ones have fallen behind their benchmarks by significantly more than their expense ratio. If well run, hopefully a fund that doesn’t follow an index can make better compromises. It just might be hard to tell how well the fund is doing this. No index to compare to, and I'm not sure we can do a good factor regression for EM or international.

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Re: Ex DFA CIO launches competitor which will also have ETFs

Post by Random Walker » Fri Jun 28, 2019 9:38 am

lazyday wrote:
Fri Jun 28, 2019 9:24 am
larryswedroe wrote:
Fri Jun 28, 2019 7:43 am
....perhaps deeper tilts. So more loading per unit of cost.
That sounds appealing. Might allow one to keep the same portfolio factor loading while owning more of Vanguard’s funds, or to go deeper into a “Larry Portfolio” by increasing factor load and reducing the equity %.
This brings up important points regarding construction of factor portfolios. The cheapest funds may not be the best. If the goal is to target certain given factor exposures, cost per unit factor exposure is likely more important than cost alone. First of all, as noted above, if a fund has deeper exposures, the investor will need less of it to get the same tilts and can use more of the cheap TSM or core fund. Secondly, the goal of all this tilting business is to diversify away from the factor that dominates our portfolios, market beta. If one uses a fund with deeper exposures to the desired factors, he needs to take on less additional market risk to obtain the desired exposure to the other factors. This results in a slightly stronger move in the direction of risk parity than using an asset class fund with less factor octane.

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Re: Ex DFA CIO launches competitor which will also have ETFs

Post by stan1 » Fri Jun 28, 2019 9:41 am

Theoretical wrote:
Thu Jun 27, 2019 10:01 pm
That explicitly ISV fund could get a bunch of assets quickly if it undercuts DFA.
That might not be a good thing. A $250M actively managed international small value ETF will not be the same product when it gets to $5B in assets. The Top 10 holdings will be different.

For the experts: How would an active ETF close to new investors in order to avoid outgrowing its strategy? PRIMECAP and Capital Opportunity are still closed to new investors in order to preserve the investment strategy of those funds.

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Re: Ex DFA CIO launches competitor which will also have ETFs

Post by sunnywindy » Fri Jun 28, 2019 11:19 am

As far as I can tell, Avantis Investors is not using the new Precidian "Active-Shares" non-transparent proprietary ETF structure that is going to appear sometime this summer. I don't have strong feelings if it is transparent or not, but licensing someone's product is always going to add cost and my guess is that fund companies will leverage this cost/feature of non-transparency to their advantage. So, I am glad these ETFs appear to be regular transparent ETFs.
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Re: Ex DFA CIO launches competitor which will also have ETFs

Post by sunnywindy » Fri Jun 28, 2019 11:30 am

stan1 wrote:
Fri Jun 28, 2019 9:41 am
Theoretical wrote:
Thu Jun 27, 2019 10:01 pm
That explicitly ISV fund could get a bunch of assets quickly if it undercuts DFA.
That might not be a good thing. A $250M actively managed international small value ETF will not be the same product when it gets to $5B in assets. The Top 10 holdings will be different.

For the experts: How would an active ETF close to new investors in order to avoid outgrowing its strategy? PRIMECAP and Capital Opportunity are still closed to new investors in order to preserve the investment strategy of those funds.
ETFs, by virtue of being an exchange traded product, can not be "closed" like a mutual fund, which is not traded on an exchange but has a net asset value (NAV) calculated at the end of the day (you buy into every stock's NAV at the closing price). The only way a regular investor cannot buy an ETF is if nobody is willing to sell you shares.

So, as you point out, what Primecap and others do to close their funds to preserve its alpha generating viability cannot happen for an ETF. That means that the capacity of an ETF has to be considered and possibly means that a strategy that works in a mutual fund structure, might not work in an ETF structure.
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Re: Ex DFA CIO launches competitor which will also have ETFs

Post by fennewaldaj » Fri Jun 28, 2019 10:46 pm

stan1 wrote:
Fri Jun 28, 2019 9:41 am
Theoretical wrote:
Thu Jun 27, 2019 10:01 pm
That explicitly ISV fund could get a bunch of assets quickly if it undercuts DFA.
That might not be a good thing. A $250M actively managed international small value ETF will not be the same product when it gets to $5B in assets. The Top 10 holdings will be different.

For the experts: How would an active ETF close to new investors in order to avoid outgrowing its strategy? PRIMECAP and Capital Opportunity are still closed to new investors in order to preserve the investment strategy of those funds.
capacity should be pretty high if its semi market cap weighted like DFA funds. The DFA international small value fund has 13 B.

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Re: Ex DFA CIO launches competitor which will also have ETFs

Post by nedsaid » Sat Sep 14, 2019 12:36 pm

This is a very interesting development. I will be, as they say, staying tuned into this as I have long wanted access to DFA type of products.
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Re: Ex DFA CIO launches competitor which will also have ETFs

Post by nisiprius » Sat Sep 14, 2019 12:39 pm

Are ETFs required to identify themselves themselves as "diversified" or "nondiversified," following the same rules that apply to mutual funds? Or isn't that distinction made for ETFs?
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Re: Ex DFA CIO launches competitor which will also have ETFs

Post by Elysium » Sat Sep 14, 2019 12:57 pm

nedsaid wrote:
Sat Sep 14, 2019 12:36 pm
This is a very interesting development. I will be, as they say, staying tuned into this as I have long wanted access to DFA type of products.
I have long had access to DFA funds. They haven't done anything for me that my Vanguard funds haven't. In fact the Vanguard funds have been more easier to ignore and tune out which enables me to sleep well at night and they have ended up producing more. DFA funds were exciting at times, but they run hot and cold, giving that feeling they cannot be trusted with all the time. I think in the end, Vanguard funds alone would have made me just better. Just my personal experience having had access to both.

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Re: Ex DFA CIO launches competitor which will also have ETFs

Post by nedsaid » Sat Sep 14, 2019 1:25 pm

Elysium wrote:
Sat Sep 14, 2019 12:57 pm
nedsaid wrote:
Sat Sep 14, 2019 12:36 pm
This is a very interesting development. I will be, as they say, staying tuned into this as I have long wanted access to DFA type of products.
I have long had access to DFA funds. They haven't done anything for me that my Vanguard funds haven't. In fact the Vanguard funds have been more easier to ignore and tune out which enables me to sleep well at night and they have ended up producing more. DFA funds were exciting at times, but they run hot and cold, giving that feeling they cannot be trusted with all the time. I think in the end, Vanguard funds alone would have made me just better. Just my personal experience having had access to both.
I do own the Vanguard Small Cap Value Index ETF, it has outperformed the DFA Small Value fund over the last 10 years. Not surprising as Vanguard Small Value Index has higher market caps and less Value loading than DFA, we have been in a Large Growth stock market after all. But still Vanguard's product was plenty well good enough and I am glad to have owned it.
A fool and his money are good for business.

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Re: Ex DFA CIO launches competitor which will also have ETFs

Post by Elysium » Sat Sep 14, 2019 1:32 pm

nedsaid wrote:
Sat Sep 14, 2019 1:25 pm
Elysium wrote:
Sat Sep 14, 2019 12:57 pm
nedsaid wrote:
Sat Sep 14, 2019 12:36 pm
This is a very interesting development. I will be, as they say, staying tuned into this as I have long wanted access to DFA type of products.
I have long had access to DFA funds. They haven't done anything for me that my Vanguard funds haven't. In fact the Vanguard funds have been more easier to ignore and tune out which enables me to sleep well at night and they have ended up producing more. DFA funds were exciting at times, but they run hot and cold, giving that feeling they cannot be trusted with all the time. I think in the end, Vanguard funds alone would have made me just better. Just my personal experience having had access to both.
I do own the Vanguard Small Cap Value Index ETF, it has outperformed the DFA Small Value fund over the last 10 years. Not surprising as Vanguard Small Value Index has higher market caps and less Value loading than DFA, we have been in a Large Growth stock market after all. But still Vanguard's product was plenty well good enough and I am glad to have owned it.
What I meant is that Vanguard funds offer a smoother ride in various market cycles than DFA funds which feel more volatile to me. They look really good when their style is in favor and look really bad when not. Therefore, Vanguard may be easier to hold in the long run due to lower volatility.

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Re: Ex DFA CIO launches competitor which will also have ETFs

Post by whodidntante » Sat Sep 14, 2019 3:19 pm

This is a rare SCV thread that cannot be found by reviewing Taylor's post history. Maybe once the funds launch.

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Re: Ex DFA CIO launches competitor which will also have ETFs

Post by MotoTrojan » Sat Sep 14, 2019 3:26 pm

nedsaid wrote:
Sat Sep 14, 2019 1:25 pm
Elysium wrote:
Sat Sep 14, 2019 12:57 pm
nedsaid wrote:
Sat Sep 14, 2019 12:36 pm
This is a very interesting development. I will be, as they say, staying tuned into this as I have long wanted access to DFA type of products.
I have long had access to DFA funds. They haven't done anything for me that my Vanguard funds haven't. In fact the Vanguard funds have been more easier to ignore and tune out which enables me to sleep well at night and they have ended up producing more. DFA funds were exciting at times, but they run hot and cold, giving that feeling they cannot be trusted with all the time. I think in the end, Vanguard funds alone would have made me just better. Just my personal experience having had access to both.
I do own the Vanguard Small Cap Value Index ETF, it has outperformed the DFA Small Value fund over the last 10 years. Not surprising as Vanguard Small Value Index has higher market caps and less Value loading than DFA, we have been in a Large Growth stock market after all. But still Vanguard's product was plenty well good enough and I am glad to have owned it.
S&P600 bested both, no?

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Re: Ex DFA CIO launches competitor which will also have ETFs

Post by nedsaid » Sat Sep 14, 2019 3:32 pm

MotoTrojan wrote:
Sat Sep 14, 2019 3:26 pm
nedsaid wrote:
Sat Sep 14, 2019 1:25 pm
Elysium wrote:
Sat Sep 14, 2019 12:57 pm
nedsaid wrote:
Sat Sep 14, 2019 12:36 pm
This is a very interesting development. I will be, as they say, staying tuned into this as I have long wanted access to DFA type of products.
I have long had access to DFA funds. They haven't done anything for me that my Vanguard funds haven't. In fact the Vanguard funds have been more easier to ignore and tune out which enables me to sleep well at night and they have ended up producing more. DFA funds were exciting at times, but they run hot and cold, giving that feeling they cannot be trusted with all the time. I think in the end, Vanguard funds alone would have made me just better. Just my personal experience having had access to both.
I do own the Vanguard Small Cap Value Index ETF, it has outperformed the DFA Small Value fund over the last 10 years. Not surprising as Vanguard Small Value Index has higher market caps and less Value loading than DFA, we have been in a Large Growth stock market after all. But still Vanguard's product was plenty well good enough and I am glad to have owned it.
S&P600 bested both, no?
I own that and the S&P 600 Small Value Index too.
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Re: Ex DFA CIO launches competitor which will also have ETFs

Post by nedsaid » Sat Sep 14, 2019 3:36 pm

Elysium wrote:
Sat Sep 14, 2019 1:32 pm
nedsaid wrote:
Sat Sep 14, 2019 1:25 pm
Elysium wrote:
Sat Sep 14, 2019 12:57 pm
nedsaid wrote:
Sat Sep 14, 2019 12:36 pm
This is a very interesting development. I will be, as they say, staying tuned into this as I have long wanted access to DFA type of products.
I have long had access to DFA funds. They haven't done anything for me that my Vanguard funds haven't. In fact the Vanguard funds have been more easier to ignore and tune out which enables me to sleep well at night and they have ended up producing more. DFA funds were exciting at times, but they run hot and cold, giving that feeling they cannot be trusted with all the time. I think in the end, Vanguard funds alone would have made me just better. Just my personal experience having had access to both.
I do own the Vanguard Small Cap Value Index ETF, it has outperformed the DFA Small Value fund over the last 10 years. Not surprising as Vanguard Small Value Index has higher market caps and less Value loading than DFA, we have been in a Large Growth stock market after all. But still Vanguard's product was plenty well good enough and I am glad to have owned it.
What I meant is that Vanguard funds offer a smoother ride in various market cycles than DFA funds which feel more volatile to me. They look really good when their style is in favor and look really bad when not. Therefore, Vanguard may be easier to hold in the long run due to lower volatility.
That is an interesting observation and it makes sense. Thank you.
A fool and his money are good for business.

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Re: Ex DFA CIO launches competitor which will also have ETFs

Post by asset_chaos » Sat Sep 14, 2019 5:07 pm

Based on this invitation, it appears the Avantis funds will launch on 30 September. This article has a few more details about these funds.
American Century will offer five investment strategies under the Avantis umbrella in both ETF and mutual fund formats in the categories of U.S. equities, international equities, emerging-market equities, U.S. small-cap value equities and international small-cap value equities.
...
And all five sets respectively will have matching expense ratios, which will range from 0.15% for the U.S. equity strategy to 0.36% for the international small-cap strategy.
Emphasis mine. It's interesting that they'll have both exchange traded and regular funds, and at no cost differential. Is Vanguard's patent up? I wonder if they'll be share classes of the one fund? The expense ratios seem competitive for this space---if the execution is good.

However, for some reason the Avantis people are shying away from the terminology of factors,
While these technically are factor-based strategies, the Avantis team doesn’t embrace that term regarding its products. “We think of ourselves as a company that uses market prices and financial science to create value-added portfolios,” according to an emailed statement. “We don’t really like to call it factor investing because we’re not trying to deliver a factor.”
If they're not delivering factors, what in the world are they doing?
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Re: Ex DFA CIO launches competitor which will also have ETFs

Post by willthrill81 » Sat Sep 14, 2019 6:23 pm

asset_chaos wrote:
Sat Sep 14, 2019 5:07 pm
Is Vanguard's patent up?
Not until 2023.
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Re: Ex DFA CIO launches competitor which will also have ETFs

Post by nedsaid » Sat Sep 14, 2019 6:27 pm

From the Avantis Website:
Avantis Investors will offer a new suite of diversified investment solutions designed to fit seamlessly into investors’ asset allocations. We focus on the efficient implementation of time-tested academic research to add value for investors through low-cost solutions that represent an evolutionary step forward for both passive and active approaches.
We believe market prices represent an unbiased view of the value of a business, reflecting the independent assessment by millions of investors of a company’s prospects and risks. Through prices, we believe the market tells us a lot about the expected return of individual securities.

Our investment process is based on an academically-supported, market-tested framework that aims to identify securities with higher expected returns based on their current market prices and other company financial information.

We believe price is a fundamental driver of higher expected returns, along with profitability, size, and momentum characteristics, in concert with other market considerations.
Sounds like a DFA approach here, these are essentially Value products.
As part of our portfolio management and trading processes, we analyze whether the benefits of a trade overcome its associated costs and risks. This cost/benefit trade-off seeks to keep turnover low, as we trade only when we believe that the benefits are meaningful and eliminate noise that typically increases costs.

The result? Broadly diversified portfolios that are designed to efficiently deliver higher expected returns with low rebalancing costs, capital gains and fees. We expect to pass these savings on to our investors through lower management fees.
Low fees, lower turnover, and patient trading strategies. They talk a lot about expected returns.

The initial strategies are U.S. Equity, International Equity, Emerging Markets Equity, U.S. Small Cap Value, and International Small Cap Value.

I have excerpted a couple of Larry Swedroe quotes regarding Avantis from another thread. So this tells you about all I know about Avantis.
Post by larryswedroe » Sun Sep 08, 2019 6:39 am

What we are seeing now in building value portfolios is more and more incorporating this added information. You learn something, you change behavior. Good example, from what I have heard and knowing the people, Avantis (Am Century) will be incorporating these ideas into their new value strategies (led by team from DFA and headed by Eduardo Repetto their former CIO). BTW, their ERs are just 15 bp for a tilted core US portfolio and 25bp for SV in US. For International SV 36bp and tilted international core just 23bp. EM tilt will be 33.
That's total expense. Note they will offer at same price both ETF and mutual fund versions. So the ETF will be more appropriate for taxable account and mutual fund for tax advantaged. Nice to see competition driving down fees, increasing the hurdle for active investors. Funds will be out I believe by month end.
Post by larryswedroe » Mon Sep 09, 2019 6:09 am

Nedsaid
The mutual funds will ONLY be available through advisors but of course the ETFs will be available to anyone. I've seen presentations now and the funds are well designed, as you would expect.
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Re: Ex DFA CIO launches competitor which will also have ETFs

Post by Longtermgrowth » Sat Sep 14, 2019 7:04 pm

Wonder how many bogleheads will switch their S&P 600 value funds for this.
I tilt via WisdomTree funds (domestic and international), but if these small value funds had been available at the time, no question would have gone with them.

WisdomTree will have to cut their expense ratios by a good bit if they want to stay in business now.

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Re: Ex DFA CIO launches competitor which will also have ETFs

Post by abuss368 » Sat Sep 14, 2019 7:12 pm

That is interesting. Nothing wrong with additional competition.

Thank you for sharing.
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Re: Ex DFA CIO launches competitor which will also have ETFs

Post by MotoTrojan » Sat Sep 14, 2019 9:26 pm

Longtermgrowth wrote:
Sat Sep 14, 2019 7:04 pm
Wonder how many bogleheads will switch their S&P 600 value funds for this.
I tilt via WisdomTree funds (domestic and international), but if these small value funds had been available at the time, no question would have gone with them.

WisdomTree will have to cut their expense ratios by a good bit if they want to stay in business now.
I wouldn’t but I may contemplate the International SCV.

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Re: Ex DFA CIO launches competitor which will also have ETFs

Post by Nathan Drake » Sat Sep 14, 2019 10:26 pm

What’s the benefit over existing index funds in this space?

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Re: Ex DFA CIO launches competitor which will also have ETFs

Post by nedsaid » Sat Sep 14, 2019 11:36 pm

Nathan Drake wrote:
Sat Sep 14, 2019 10:26 pm
What’s the benefit over existing index funds in this space?
My best guess is that it is in the screening, Avantis will likely do something like DFA does, screen first for one factor and secondly by one or two other factors. For example, DFA for its Small Value fund would screen of course for Size and Value and then set momentum to neutral, I believe they have a Quality component as well. Avantis will likely have their own approach very similar to DFA but probably with their own proprietary screening criteria. The criteria are likely tweaked as research discovers ways to better load on factors.

It is interesting that they focus on prices and say they aren't trying to deliver a factor. My guess is that they are combining factors within their products and that they seek to find just the right combination to deliver maximum results. It seems that Value predominates as the focus seems to be on price. Probably a way of being vague as to not give away exactly what they are doing. They also have to be different in some way from Dimensional Funds. Not sure if there are such things as copyrights or patents, perhaps Larry could speak to this, but everyone's process is proprietary. I suppose Avantis doesn't want to get sued by DFA.

So pretty much, their screening criteria will supposedly be better than the S&P 600 Small Value Index, the CRSP Small Value Index, or Dimensional Funds Small Value. The proof of the pudding is in the eating, as they say. Larry Swedroe says the new products are well constructed. Hard to say if they will be better than other factor products.
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Re: Ex DFA CIO launches competitor which will also have ETFs

Post by comeinvest » Sun Sep 15, 2019 6:00 am

Unfortunately, still no competition for DGS.

And fees of the international small value almost identical to that of the existing ISCF, SCID, SCIX, and others. What is a specific measure in which Avantis is better than those?

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Re: Ex DFA CIO launches competitor which will also have ETFs

Post by nedsaid » Sun Sep 15, 2019 10:07 am

comeinvest wrote:
Sun Sep 15, 2019 6:00 am
Unfortunately, still no competition for DGS.

And fees of the international small value almost identical to that of the existing ISCF, SCID, SCIX, and others. What is a specific measure in which Avantis is better than those?
DGS - Wisdom Tree Emerging Markets Small Cap Dividend Fund Expense Ratio 0.63%
ISCF - iShares Edge MSCI Multifactor International Small Cap ETF Expense Ratio 0.40%
SCID - Global X Scientific Beta Europe ETF Expense Ratio 0.38%
SCIX - Global X Scientific Beta Asia ex-Japan ETF Expense Ratio 0.38%
DLS- Wisdom Tree International Small Cap Dividend ETF Expense Ratio 0.58%

Advantis US Equity Expense Ratio 0.15%
Advantis International Equity 0.23%
Advantis Emerging Markets Equity 0.33%
Advantis U.S. Small Cap Value 0.25%
Advantis International Small Cap Value 0.36%

Looks to me that Advantis (American Century) will be very competitive in fees compared to the ETFs you cite. I suppose you will have to trust whatever proprietary screening that Advantis will be doing but seeing that these are former DFA employees, it should have similarities to the DFA approach. Again, Larry says that these Avantis products are well designed. So seeing that these are new, you would have to put faith and trust into the managers who are seasoned and experienced in the factor tilting approach.

Still, there is more out there than I realized, thanks for bringing up the ticker symbols for the Wisdom Tree, iShares, and Global X products. I added Wisdom Tree International Small Cap Dividend (DLS) as I own this myself. Thanks for sharing.

Note that Morningstar rates the Global X products as 3 star, the iShares product as 4 star, and the Wisdom Tree products as 4 star.
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Re: Ex DFA CIO launches competitor which will also have ETFs

Post by comeinvest » Mon Sep 16, 2019 1:42 am

nedsaid wrote:
Sun Sep 15, 2019 10:07 am
comeinvest wrote:
Sun Sep 15, 2019 6:00 am
Unfortunately, still no competition for DGS.

And fees of the international small value almost identical to that of the existing ISCF, SCID, SCIX, and others. What is a specific measure in which Avantis is better than those?
DGS - Wisdom Tree Emerging Markets Small Cap Dividend Fund Expense Ratio 0.63%
ISCF - iShares Edge MSCI Multifactor International Small Cap ETF Expense Ratio 0.40%
SCID - Global X Scientific Beta Europe ETF Expense Ratio 0.38%
SCIX - Global X Scientific Beta Asia ex-Japan ETF Expense Ratio 0.38%
DLS- Wisdom Tree International Small Cap Dividend ETF Expense Ratio 0.58%

Advantis US Equity Expense Ratio 0.15%
Advantis International Equity 0.23%
Advantis Emerging Markets Equity 0.33%
Advantis U.S. Small Cap Value 0.25%
Advantis International Small Cap Value 0.36%

Looks to me that Advantis (American Century) will be very competitive in fees compared to the ETFs you cite. I suppose you will have to trust whatever proprietary screening that Advantis will be doing but seeing that these are former DFA employees, it should have similarities to the DFA approach. Again, Larry says that these Avantis products are well designed. So seeing that these are new, you would have to put faith and trust into the managers who are seasoned and experienced in the factor tilting approach.

Still, there is more out there than I realized, thanks for bringing up the ticker symbols for the Wisdom Tree, iShares, and Global X products. I added Wisdom Tree International Small Cap Dividend (DLS) as I own this myself. Thanks for sharing.

Note that Morningstar rates the Global X products as 3 star, the iShares product as 4 star, and the Wisdom Tree products as 4 star.
Thanks. But Morningstar ratings are absolute and total garbage. Recent performance based, zero significance.

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Re: Ex DFA CIO launches competitor which will also have ETFs

Post by larryswedroe » Mon Sep 16, 2019 6:28 am

Basically value plus profitability measure, and MOM screens. The team is all ex DFA I believe.
Larry

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Re: Ex DFA CIO launches competitor which will also have ETFs

Post by comeinvest » Mon Sep 16, 2019 6:41 am

larryswedroe wrote:
Mon Sep 16, 2019 6:28 am
Basically value plus profitability measure, and MOM screens. The team is all ex DFA I believe.
Larry
But some management being ex-DFA and the idea being copied from DFA does not necessarily imply that the operational systems, IT, trading desk, affiliated brokers, business logic, etc., are all as efficient as DFA, even if DFA is the gold standard, does it? Especially during the ramp-up phase, and with no way to test or benchmark.

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Re: Ex DFA CIO launches competitor which will also have ETFs

Post by nedsaid » Mon Sep 16, 2019 10:24 am

comeinvest wrote:
Mon Sep 16, 2019 1:42 am
nedsaid wrote:
Sun Sep 15, 2019 10:07 am

Note that Morningstar rates the Global X products as 3 star, the iShares product as 4 star, and the Wisdom Tree products as 4 star.
Thanks. But Morningstar ratings are absolute and total garbage. Recent performance based, zero significance.
Gosh, I took a lot of time responding to your post, researching, and providing additional information. The only response was a rant against Morningstar ratings. I certainly wouldn't buy funds based on Morningstar ratings but it does give an indication of performance, no one says, including Morningstar that the ratings are infallible indicators of future performance.

I took time to attach names to the ticker symbols you provided, add expense ratios, look up Morningstar ratings and provide comparison to the new Avantis products. You made a nice contribution of making me aware of products that I and probably others were not aware of. Took time to expand upon your post. Got a snarky response back. Sometimes I wonder why I bother to post here.
A fool and his money are good for business.

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