Any further reason to hold DLS?

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ilan1h
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Any further reason to hold DLS?

Post by ilan1h »

Have held DLS (small cap international) since 2007 due to enthusiasm on this site (at the time) for this asset class. It appears to have languished over the last 14 years, vastly underperforming many other asset classes. It had an amazingly bad drawdown in 2008 (about 60%) and has a higher SD and "worst year" than even VTI (but has underperformed VTI by over 50% ). In short, a highly volatile fund with very poor performance and high ER over a long period of time. So, time to ditch this clunker? I'm not sure that I want to wait another 14 years before I realize the benefit that this asset class adds to my overall portfolio. Strangely enough, if I sell it today it is at approximately the same price that I bought it for in 2007!
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unclescrooge
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Re: Any further reason to hold DLS?

Post by unclescrooge »

The average annual return for DLS over past 10 years was 6.75%.
It's beaten VEA over the past 10 years by 1.25% a year.

Yes, it's not terrific, but it's not terrible either.

How many times did you rebalance over the past decade?

Have you been reinvesting the dividends?
Last edited by unclescrooge on Sat Sep 12, 2020 3:37 pm, edited 2 times in total.
Topic Author
ilan1h
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Re: Any further reason to hold DLS?

Post by ilan1h »

Never rebalanced but I did reinvest dividends. The CAGR since inception (close to when I bought it) is around 2.45% according to Portfoliovisualizer. Pretty abysmal. Also, not so sure about your numbers. According to portfoliovisualizer the price of both VEA and DLS were identical in both 2010 and 2020 ie: but the ride was much rougher for DLS.
YRT70
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Re: Any further reason to hold DLS?

Post by YRT70 »

DLS hasn't done great but it still outperformed VEA and VGTSMX (Vanguard developed markets).
https://www.portfoliovisualizer.com/bac ... ion3_3=100

If you want to include international small cap (value) there are cheaper ways to do it though.
caklim00
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Re: Any further reason to hold DLS?

Post by caklim00 »

AVDV .36 ER as long as you dont have dls with gains in taxable
rascott
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Re: Any further reason to hold DLS?

Post by rascott »

ilan1h wrote: Sat Sep 12, 2020 12:05 am Have held DLS (small cap international) since 2007 due to enthusiasm on this site (at the time) for this asset class. It appears to have languished over the last 14 years, vastly underperforming many other asset classes. It had an amazingly bad drawdown in 2008 (about 60%) and has a higher SD and "worst year" than even VTI (but has underperformed VTI by over 50% ). In short, a highly volatile fund with very poor performance and high ER over a long period of time. So, time to ditch this clunker? I'm not sure that I want to wait another 14 years before I realize the benefit that this asset class adds to my overall portfolio. Strangely enough, if I sell it today it is at approximately the same price that I bought it for in 2007!

Most every international fund has returned basically nothing since 2007, so this shouldn't be a surprise. Nothing inherently wrong with DLS, compared to most every other international clunker.
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ilan1h
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Re: Any further reason to hold DLS?

Post by ilan1h »

I agree. I looked at VGTSX (Vang Intl stock index) and it's pretty much identical in most respects to DLS. The question in such cases is whether or not to continue to hold in the face of very disappointing returns, or to expect that the asset class should eventually outperform? We know that certain sectors can perform poorly for a decade or longer before roaring back, so it would be annoying to pivot out of this only to watch it roar back. I'm thinking that international markets have a slight edge now over the U.S in the sense that their pandemic situation is somewhat better.
jayoco
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Re: Any further reason to hold DLS?

Post by jayoco »

Portfolio Visualizer is absolutely incorrect. I find their number to be inaccurate in too many instances.

I went to the Wisdom Tree website and double their numbers using Morningstar. They jive. Not sure of PV's data source but they need to check it.

That said, I'm not an advocate of DLS one way or the other but I also hold the asset class.
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ilan1h
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Re: Any further reason to hold DLS?

Post by ilan1h »

Not sure I am understanding what you are disagreeing with. Morningstar shows that the NAV of DLS in 2006 was around 60. The NAV in 2020 is 60. So, as far as I am concerned, the only money that I made with this over the last 14 years has been the dividends.
YRT70
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Re: Any further reason to hold DLS?

Post by YRT70 »

ilan1h wrote: Sat Sep 12, 2020 11:43 am I agree. I looked at VGTSX (Vang Intl stock index) and it's pretty much identical in most respects to DLS.
VGTSX contains Emerging Markets, DLS doesn't. VTMGX is more comparable to DLS.

10 year performance on M*
DLS: 6.48%
VTMGX: 5.54%
NMBob
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Re: Any further reason to hold DLS?

Post by NMBob »

jayoco wrote: Sat Sep 12, 2020 11:56 am Portfolio Visualizer is absolutely incorrect. I find their number to be inaccurate in too many instances.

I went to the Wisdom Tree website and double their numbers using Morningstar. They jive. Not sure of PV's data source but they need to check it.

That said, I'm not an advocate of DLS one way or the other but I also hold the asset class.
portfolio visualizer matches morningstar trailing returns if you match the time periods correctly. set the mstar trailing returns to 'month end' right next to the words trailing return, so the numbers will end on 31 august instead of sept 11. then make sure you match years and months in portfolio visualizer. ie you want to double check the 3 year trailing return as of 31 aug 2020, set portfolio visualizer 'month to month for 'time period' and then set it to start 1 sep 2017 . it matches morningstar 3 year trailing return.

as for dls, since inception, seems like i would like less market correlation than its .86 to accept such inferior returns to sp500.

dls/vgd 500 since july 2006
-------------------------------
cagr - 4.44 dls / 9.56 vgd500
sharpe - .27 / .61
sortino - .37 / .88
mkt correlation - .86 / 1.00
Last edited by NMBob on Sat Sep 12, 2020 3:25 pm, edited 1 time in total.
gaz101
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Re: Any further reason to hold DLS?

Post by gaz101 »

SCV tilt is for life. OP should reexamine WHY you bought DLS.
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nedsaid
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Re: Any further reason to hold DLS?

Post by nedsaid »

DLS, the Wisdom Tree International Small-Cap Dividend ETF, is a perfectly good International Small-Cap Value investment. It is about the only thing out there other than DFA that has much of a track record. I own it myself. Avantis has an International Small-Cap Value ETF, AVDV, that is a good alternative but it is very new.
A fool and his money are good for business.
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goingup
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Re: Any further reason to hold DLS?

Post by goingup »

Not sure how old you are, but as a retired person I have a use for funds without big gains in our taxable account. I'd be selling (chipping away) at that fund for living expenses while trying not to realize large capital gains. That fund wouldn't be a core holding for me so it would be a pretty easy decision to sell it.
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unclescrooge
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Re: Any further reason to hold DLS?

Post by unclescrooge »

ilan1h wrote: Sat Sep 12, 2020 1:08 am Never rebalanced but I did reinvest dividends. The CAGR since inception (close to when I bought it) is around 2.45% according to Portfoliovisualizer. Pretty abysmal. Also, not so sure about your numbers. According to portfoliovisualizer the price of both VEA and DLS were identical in both 2010 and 2020 ie: but the ride was much rougher for DLS.
I got my numbers from morningstar.
NMBob
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Re: Any further reason to hold DLS?

Post by NMBob »

unclescrooge wrote: Sat Sep 12, 2020 3:37 pm
ilan1h wrote: Sat Sep 12, 2020 1:08 am Never rebalanced but I did reinvest dividends. The CAGR since inception (close to when I bought it) is around 2.45% according to Portfoliovisualizer. Pretty abysmal. Also, not so sure about your numbers. According to portfoliovisualizer the price of both VEA and DLS were identical in both 2010 and 2020 ie: but the ride was much rougher for DLS.
I got my numbers from morningstar.

portfolio visualizer 10 year, sept 2010 - aug 2020, cagr DLS - 7.07. VEA - 6.16. Those are the same numbers as morningstar trailing return 10 year when set to month end trailing return.

https://www.portfoliovisualizer.com/bac ... ion2_2=100
Last edited by NMBob on Sat Sep 12, 2020 4:02 pm, edited 1 time in total.
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unclescrooge
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Re: Any further reason to hold DLS?

Post by unclescrooge »

ilan1h wrote: Sat Sep 12, 2020 12:33 pm Not sure I am understanding what you are disagreeing with. Morningstar shows that the NAV of DLS in 2006 was around 60. The NAV in 2020 is 60. So, as far as I am concerned, the only money that I made with this over the last 14 years has been the dividends.
What's wrong with that?
fabdog
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Re: Any further reason to hold DLS?

Post by fabdog »

Have held DLS (small cap international) since 2007 due to enthusiasm on this site (at the time) for this asset class.
Well, I guess if there's a lack of enthusiasm for it on this site now, you should definitely sell. And buy something that folks on the site are enthusiastic about, if that's your strategy

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unclescrooge
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Re: Any further reason to hold DLS?

Post by unclescrooge »

ilan1h wrote: Sat Sep 12, 2020 1:08 am Never rebalanced but I did reinvest dividends. The CAGR since inception (close to when I bought it) is around 2.45% according to Portfoliovisualizer. Pretty abysmal. Also, not so sure about your numbers. According to portfoliovisualizer the price of both VEA and DLS were identical in both 2010 and 2020 ie: but the ride was much rougher for DLS.
Why haven't you been rebalancing?
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Re: Any further reason to hold DLS?

Post by grabiner »

ilan1h wrote: Sat Sep 12, 2020 12:33 pm Not sure I am understanding what you are disagreeing with. Morningstar shows that the NAV of DLS in 2006 was around 60. The NAV in 2020 is 60. So, as far as I am concerned, the only money that I made with this over the last 14 years has been the dividends.
And since DLS is dividend-weighted, that gives it better returns than other stock funds whose share price didn't change, which is about what happened to the international markets over those 14 years. DLS lost 60% in the 2007-2009 market decline, but so did everything else.
Wiki David Grabiner
jayoco
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Re: Any further reason to hold DLS?

Post by jayoco »

NMBob wrote: Sat Sep 12, 2020 2:35 pm
jayoco wrote: Sat Sep 12, 2020 11:56 am Portfolio Visualizer is absolutely incorrect. I find their number to be inaccurate in too many instances.

I went to the Wisdom Tree website and double their numbers using Morningstar. They jive. Not sure of PV's data source but they need to check it.

That said, I'm not an advocate of DLS one way or the other but I also hold the asset class.
portfolio visualizer matches morningstar trailing returns if you match the time periods correctly. set the mstar trailing returns to 'month end' right next to the words trailing return, so the numbers will end on 31 august instead of sept 11. then make sure you match years and months in portfolio visualizer. ie you want to double check the 3 year trailing return as of 31 aug 2020, set portfolio visualizer 'month to month for 'time period' and then set it to start 1 sep 2017 . it matches morningstar 3 year trailing return.

as for dls, since inception, seems like i would like less market correlation than its .86 to accept such inferior returns to sp500.

dls/vgd 500 since july 2006
-------------------------------
cagr - 4.44 dls / 9.56 vgd500
sharpe - .27 / .61
sortino - .37 / .88
mkt correlation - .86 / 1.00
Thanks. I can't get them to match. I must be doing something wrong. Hmm...
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Forester
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Re: Any further reason to hold DLS?

Post by Forester »

ilan1h wrote: Sat Sep 12, 2020 12:05 am Have held DLS (small cap international) since 2007 due to enthusiasm on this site (at the time) for this asset class. It appears to have languished over the last 14 years, vastly underperforming many other asset classes. It had an amazingly bad drawdown in 2008 (about 60%) and has a higher SD and "worst year" than even VTI (but has underperformed VTI by over 50% ). In short, a highly volatile fund with very poor performance and high ER over a long period of time. So, time to ditch this clunker? I'm not sure that I want to wait another 14 years before I realize the benefit that this asset class adds to my overall portfolio. Strangely enough, if I sell it today it is at approximately the same price that I bought it for in 2007!
Ex-US equity markets were in a bubble by 2006/07 and the US dollar was weak, therefore you bought high. But much of the underperformance of DLS stems from 2018. DLS total return is around 41% higher than Sep 11th 2007 so it's truly been flat after inflation.

I believe it would be unwise to sell this investment and double down on US megacap. And if you bought abother ex-US fund the situation would be the same, still waiting for a turn.
invest4
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Re: Any further reason to hold DLS?

Post by invest4 »

I held DLS for many years and thought it to be solid for small cap international. Alas, I adjusted the overall approach to my portfolio (much simpler) and did away with it (along with the others like DGS, etc.) What is less clear to me is whether or not you are simply looking for a potential replacement or you also consider the opportunity the rethink the overall approach / makeup of your portfolio?

Best wishes.
garlandwhizzer
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Re: Any further reason to hold DLS?

Post by garlandwhizzer »

It's not a fair comparison between DM SCV (DLS) and DM LCB (VXUS which includes both EM and DM LC). The appropriate comparison is between DLS (DM SCV with a dividend slant), FNDC (DM SCV with a fundamental index slant) and SCZ, the iShares DM SCB index with no value slant. Results are from Portfolio Visualizer for the longest time frame available for the 3 fund comparison, 7 years.

https://www.portfoliovisualizer.com/bac ... ion3_3=100

As you can see SCZ outperformed both DM SCV offerings and did so with considerably lower maximal drawdown and consequently a higher Sharpe Ratio (return per unit of risk). No guarantees going forward that the same will play out in the next 7 years.

Garland Whizzer
guyinlaw
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Re: Any further reason to hold DLS?

Post by guyinlaw »

edit: I didn't realize Rick had a post and article about this.

viewtopic.php?t=315351

====

I like Rick Ferris analogy of thinking about your portfolio as a cake. I think Int small cap are like one of sprinkles not very imp. Below is an approximation of how I think of it.

Base
US TSM
Int TSM
US Bonds

Icing
US small
US SCV
EM
US REITs

Sprinkles
Int SC, SCV
Int Bonds
Int REITs

I have set my target > 70% base, ~20% icing, << 10% Sprinkles. Rick keeps saying that simplify is an alpha, I try to remind myself that.

If you really want Int SCV, consider AVDV. Also if you decide to tilt, you must do it for many decades. It's not easy.
Time is your friend; impulse is your enemy. - John C. Bogle
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ilan1h
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Re: Any further reason to hold DLS?

Post by ilan1h »

I generally believe in the concept of diversifying one's portfolio with other asset classes even though they may undergo long periods of underperformance. The question is when does one jettison a losing asset class. I think I have been patient for 14 years having tied up a large amount of money in this. It has underperformed by every metric imaginable ie: way more volatile than even the SP500, larger drawdowns, much smaller CAGR etc. I'm sure that if I waited another 2 decades it will have proved its worth but I'm kind of done with it. It's possible that it's better to simply avoid certain asset classes in our portfolios and this may be one of them.
burritoLover
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Re: Any further reason to hold DLS?

Post by burritoLover »

ilan1h wrote: Sat Sep 19, 2020 2:47 pm I generally believe in the concept of diversifying one's portfolio with other asset classes even though they may undergo long periods of underperformance. The question is when does one jettison a losing asset class. I think I have been patient for 14 years having tied up a large amount of money in this. It has underperformed by every metric imaginable ie: way more volatile than even the SP500, larger drawdowns, much smaller CAGR etc. I'm sure that if I waited another 2 decades it will have proved its worth but I'm kind of done with it. It's possible that it's better to simply avoid certain asset classes in our portfolios and this may be one of them.
Had it returned 12+% the last 10 years, would you be dumping it? This is the best way to look at it - does it not fit with your strategy now because it hasn't performed well? Or have you gained additional insight to inform and change your strategy? Perhaps it is the latter as you just picked a tilt people on a forum where bullish about without an actual reason as to why that fits well in your portfolio (or at least that is what it sounds like).
"Your money is like a bar of soap. The more you handle it, the less you’ll have." - Gene Fama
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Re: Any further reason to hold DLS?

Post by Day9 »

ilan1h wrote: Sat Sep 19, 2020 2:47 pm I think I have been patient for 14 years having tied up a large amount of money in this. It [DLS] has underperformed by every metric imaginable ie: way more volatile than even the SP500, larger drawdowns, much smaller CAGR etc. I'm sure that if I waited another 2 decades it will have proved its worth but I'm kind of done with it. It's possible that it's better to simply avoid certain asset classes in our portfolios and this may be one of them.
Since 1929 there have been 3 periods of at least 13 years where the S&P 500 underperformed riskless 1-month Treasury Bills. Let me copy your quote and plug in those asset classes:
I think I have been patient for 14 years having tied up a large amount of money in this. The S&P 500 has underperformed by every metric imaginable ie: way more volatile than even 1 moth riskless Treasury Bills, larger drawdowns, much smaller CAGR etc. I'm sure that if I waited another 2 decades it will have proved its worth but I'm kind of done with it. It's possible that it's better to simply avoid certain asset classes in our portfolios and this may be one of them.
I'm just a fan of the person I got my user name from
KyleAAA
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Re: Any further reason to hold DLS?

Post by KyleAAA »

Don’t try to time the market.
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unclescrooge
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Re: Any further reason to hold DLS?

Post by unclescrooge »

ilan1h wrote: Sat Sep 19, 2020 2:47 pm I generally believe in the concept of diversifying one's portfolio with other asset classes even though they may undergo long periods of underperformance. The question is when does one jettison a losing asset class. I think I have been patient for 14 years having tied up a large amount of money in this. It has underperformed by every metric imaginable ie: way more volatile than even the SP500, larger drawdowns, much smaller CAGR etc. I'm sure that if I waited another 2 decades it will have proved its worth but I'm kind of done with it. It's possible that it's better to simply avoid certain asset classes in our portfolios and this may be one of them.
Not 100% true. It outperformed SPY by 10 percentage points in 2009 and 2017. Just enough to entice investors :mrgreen:

Small cap outperforms but with higher risk. That's well known.
Unfortunately for you, the risk showed up in your time horizon and not the return. That's exactly how investing is supposed to work.

What were your expectations?
Topic Author
ilan1h
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Re: Any further reason to hold DLS?

Post by ilan1h »

I guess the greater nature of the question is are there asset classes that certain investors (ie:me) should avoid? Traditionally we hold asset classes to get the zig/zag effect ie: the smoothing out and enhancing effect of a diversified portfolio. However, some asset classes, such as the one represented by DLS, have not offered that advantage. It has a 0.87 correlation to the U.S market, it has unhedged currency risk and I've never even heard of any of the companies that it owns. Trading spreads are wide, liquidity is questionable, ER is pricey and it is probably more exposed to governmental, environmental and political disruptions. In short, I am re-evaluating the asset classes that I am comfortable with and international small value is out. It may sound silly but investors need to have some modicum of understanding of the vehicles that they invest in. When that level of understanding is close to zero, it may be best to avoid.
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unclescrooge
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Re: Any further reason to hold DLS?

Post by unclescrooge »

ilan1h wrote: Sun Sep 20, 2020 12:44 pm I guess the greater nature of the question is are there asset classes that certain investors (ie:me) should avoid? Traditionally we hold asset classes to get the zig/zag effect ie: the smoothing out and enhancing effect of a diversified portfolio. However, some asset classes, such as the one represented by DLS, have not offered that advantage. It has a 0.87 correlation to the U.S market, it has unhedged currency risk and I've never even heard of any of the companies that it owns. Trading spreads are wide, liquidity is questionable, ER is pricey and it is probably more exposed to governmental, environmental and political disruptions. In short, I am re-evaluating the asset classes that I am comfortable with and international small value is out. It may sound silly but investors need to have some modicum of understanding of the vehicles that they invest in. When that level of understanding is close to zero, it may be best to avoid.
Maybe you should increase your understanding of asset classes rather than just ignoring the ones that have underperformed in recent history.
000
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Re: Any further reason to hold DLS?

Post by 000 »

I would stay the course.
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