Rip Van Winkle Awakes to DFA ETFs, Avantis?

[Small Law Survivor]

For many years I read BH daily, but after I retired eight years ago I slowed down to almost not-at-all. So Rip Van Winkle - that's me!

However, somehow, in the midst of my slumbers word has drifted down that DFA is no longer "advisor-only," and that there a new kid on the block - Avantis - that is a DFA spin-off, knock-off.

What am I missing? Should I awake fully and start reviewed DFA/Avantis offerings, or can I (please ....) just dive back into delta sleep?

thanks, Small Law Survivor

[retiredjg]

Yes, there are some new and exciting things going on with DFA and Advantis. Probably more to come from them and others over the years.

So far, I have not seen any reason to venture away from my basic-with-a-little-added-on portfolio. It's easy. I'm familiar with it and don't have to learn new funds or new procedures. Saving a bonus point or two is not going to change anything for me.

There is new shiny stuff, but I'm not sure you are missing anything if you are happy with what you have.

[Leif]

I accumulated a number of DFA funds back at the turn of the century, the so-called "lost decade". I left my advisor a long time ago, but I'm still holding some of my DFA mutual funds in my Roth. Now in retirement I hold them for some asset class diversification. Costs of the two are similar. Avantis has a better tax cost ratio for SCV. So, I give the edge to Avantis. I doubt I'll buy more of either. I think you can take a nap with one eye open.

[sycamore]

Should I awake fully and start reviewed DFA/Avantis offerings, or can I (please ....) just dive back into delta sleep?

What's wrong with your current choice of funds?
Do they fulfill your desired asset allocation in support of your investing goals, and are they low-cost index funds? If so, leaving well enough alone is probably the best course of inaction.

If your request is triggered by something like FOMO (fear of missing out), I would just go back to sleep

[Svensk Anga]

If you like to tilt, you may want to look at AVDV, Avantis International Small Cap Value before you doze off. International Small Cap Value was probably not an easily invest-able asset class when you stopped paying attention, but now you can have it. I would guess that it has better diversification value from US equities than the multi-nationals headquartered overseas.

[folkher0]

Go back to sleep. You didn't miss anything at all.

[Nathan Drake]

If you want higher returns, more diversified risk exposure, and low cost they are superb options as part of an overall allocation if you can stick with them

[breakfastinbed]

The claim is that Avantis products should provide a higher expected return, which thus far has been delivered with US products (AVUV, AVUS) as well as international (AVDV, AVES). They also have popular one-fund options (AVGE, AVGV). The question is whether you think this out-performance will continue.

DFA also has a number of ETFs now, some of which are notably tax-efficient - at my tax bracket, I can get an "active" multi-factor tilted international fund from DFA for about 8 basis points more in total cost than VXUS.

Do you have to pay attention to this? No, unless you are interested in moving money into five factor-tilted funds. If you are, you should probably be looking at these funds over Vanguard/Fidelity options.

Disclaimer: I own two Avantis funds and two DFA funds, which are tax loss harvesting pairs, and am considering adding a third pair.

[Nathan Drake]

The claim is that Avantis products should provide a higher expected return, which thus far has been delivered with US products (AVUV, AVUS) as well as international (AVDV, AVES). They also have popular one-fund options (AVGE, AVGV). The question is whether you think this out-performance will continue.

DFA also has a number of ETFs now, some of which are notably tax-efficient - at my tax bracket, I can get an "active" multi-factor tilted international fund from DFA for about 8 basis points more in total cost than VXUS.

Do you have to pay attention to this? No, unless you are interested in moving money into five factor-tilted funds. If you are, you should probably be looking at these funds over Vanguard/Fidelity options.

Disclaimer: I own two Avantis funds and two DFA funds, which are tax loss harvesting pairs, and am considering adding a third pair.

Which DFA funds are international tax efficient?

[dcabler]

Always fun when we can start the latest debate on factors, international and international-factors. I have high hopes that this will be the thread that will have the compelling arguments, for or against, that will finally change everybody's minds.

[CorradoJr]

I started listening a lot to the "Talking Real Money" podcast likely tipped off from an advertisement within the Clark Howard podcast.

The Talking Real Money guys talk non-stop about Avantis and AVUV (Small Cap Value ETF) and AVGE (Total World Equity ETF) and some other ETFs.

For me, I'm not impressed yet and am excited to see how the debate plays out in this thread.
Their expense rations even seem high at 0.2x%, an immediate issue for me.

[Nathan Drake]

I started listening a lot to the "Talking Real Money" podcast likely tipped off from an advertisement within the Clark Howard podcast.

The Talking Real Money guys talk non-stop about Avantis and AVUV (Small Cap Value ETF) and AVGE (Total World Equity ETF) and some other ETFs.

For me, I'm not impressed yet and am excited to see how the debate plays out in this thread.
Their expense rations even seem high at 0.2x%, an immediate issue for me.

Historical premiums for SCV are 1-2%+

So the added expense is minor in comparison to the expected premium

[WoodSpinner]

The claim is that Avantis products should provide a higher expected return, which thus far has been delivered with US products (AVUV, AVUS) as well as international (AVDV, AVES). They also have popular one-fund options (AVGE, AVGV). The question is whether you think this out-performance will continue.

DFA also has a number of ETFs now, some of which are notably tax-efficient - at my tax bracket, I can get an "active" multi-factor tilted international fund from DFA for about 8 basis points more in total cost than VXUS.

Do you have to pay attention to this? No, unless you are interested in moving money into five factor-tilted funds. If you are, you should probably be looking at these funds over Vanguard/Fidelity options.

Disclaimer: I own two Avantis funds and two DFA funds, which are tax loss harvesting pairs, and am considering adding a third pair.

Over what time period?

[breakfastinbed]

Which DFA funds are international tax efficient?

DISV comes to mind. Though personally I am waiting for another year of data before putting it in taxable - I currently keep everything international in tax-sheltered. I believe DISV's 2023 data was a 2.79% dividend, 100% qualified, with 11.8% foreign tax.

Over what time period?

Since inception for all funds:
-AVUS has outperformed VTI very slightly (CAGR 0.08%), which is notable given that AVUS is a value-tilted fund (~5 years)
-AVUV has outperformed VBR by 4.17% annually, and has underperformed VTI by 0.06% (~5 years)
-ADVD has outperformed VXUS by 2.51% annually (~5 years)
-AVES has outperformed VWO by 1.6% annually, (~3 years)

More data is needed, of course, but personally I am encouraged by this performance of a bunch of value-tilted funds in a strong growth period.

Their expense rations even seem high at 0.2x%, an immediate issue for me.

The counter-arguments are:
1) Avantis funds are very tax-efficient - AVUV's tax cost is actually about the same as VTI's, so AVUV, at an ER of 0.25%, has an equivalent total cost (at least for my numbers in my bracket) as VBR at 0.07% ER. This is also true for DFA - most of these companies' US funds, and many of their international funds, pay relatively low, 100% qualified, dividends.

2) If you believe the research on factor returns, a cost of 0.2% is inconsequential. That part is up to you, though.

[nedsaid]

For many years I read BH daily, but after I retired eight years ago I slowed down to almost not-at-all. So Rip Van Winkle - that's me!

However, somehow, in the midst of my slumbers word has drifted down that DFA is no longer "advisor-only," and that there a new kid on the block - Avantis - that is a DFA spin-off, knock-off.

What am I missing? Should I awake fully and start reviewed DFA/Avantis offerings, or can I (please ....) just dive back into delta sleep?

thanks, Small Law Survivor

If you have been an investor who has done factor investing, particularly with the style index funds, these DFA and Avantis ETFs are worth a look. I wish things like this were available 30 years ago without an Advisor but they weren't. Vanguard started offering their Value and Growth index funds in 1992. From memory, they started offering a Small Value index in about 1998. T. Rowe Price started their Small Value fund in the late 1980's, when I researched this that was the oldest fund that I could find. So factor products, even active funds and style indexes haven't been around for all that long.

If you have invested in a few market cap weighted index funds in typical Boglehead fashion, I wouldn't make a change now particularly at our age. You can go ahead an roll over and go back to sleep.

[Chocolatebar]

Which DFA funds are international tax efficient?

DISV comes to mind. Though personally I am waiting for another year of data before putting it in taxable - I currently keep everything international in tax-sheltered. I believe DISV's 2023 data was a 2.79% dividend, 100% qualified, with 11.8% foreign tax.

Over what time period?

Since inception for all funds:
-AVUS has outperformed VTI very slightly (CAGR 0.08%), which is notable given that AVUS is a value-tilted fund (~5 years)
-AVUV has outperformed VBR by 4.17% annually, and has underperformed VTI by 0.06% (~5 years)
-ADVD has outperformed VXUS by 2.51% annually (~5 years)
-AVES has outperformed VWO by 1.6% annually, (~3 years)

More data is needed, of course, but personally I am encouraged by this performance of a bunch of value-tilted funds in a strong growth period.

The tax efficiency of international value funds is certainly impressive. However, my concern with holding them is that they add unnecessary complexity to my portfolio. To achieve full international exposure, you would need at least three separate funds instead of just one. Additionally, I’d have to allocate these funds across different accounts (since emerging markets shouldn't be held in taxable accounts), which would require keeping track of allocations with a spreadsheet. Given that international value makes up a relatively small portion of my portfolio, this added complexity isn’t worth it to me.

I really wish Avantis or DFA offered a one-fund solution similar to VXUS but with a value tilt. I would seriously consider such an option, and given their track record for tax efficiency, I’d likely choose it over VXUS.

[ScottW]

I really wish Avantis or DFA offered a one-fund solution similar to VXUS but with a value tilt. I would seriously consider such an option, and given their track record for tax efficiency, I’d likely choose it over VXUS.

The closest you'll get is AVDE, which is total developed international with a tilt to small and value. It does not contain emerging markets exposure, however.

[Chocolatebar]

I really wish Avantis or DFA offered a one-fund solution similar to VXUS but with a value tilt. I would seriously consider such an option, and given their track record for tax efficiency, I’d likely choose it over VXUS.

The closest you'll get is AVDE, which is total developed international with a tilt to small and value. It does not contain emerging markets exposure, however.

After doing a bit of research, it looks like AVNM (Avantis All International Markets Equity ETF) is exactly what I'm looking for. However, it's still relatively new and the AUM is quite small at this point. I'll definitely be keeping an eye on it.

[breakfastinbed]

The closest you'll get is AVDE, which is total developed international with a tilt to small and value. It does not contain emerging markets exposure, however.

After doing a bit of research, it looks like AVNM (Avantis All International Markets Equity ETF) is exactly what I'm looking for. However, it's still relatively new and the AUM is quite small at this point. I'll definitely be keeping an eye on it.

Avantis has many funds and you can usually find what you're looking for. For example, Avantis offers both AVGV (Avantis All Equity Markets Value ET) and AVNV (Avantis All International Markets Value ETF). Both are fund-of-funds so aren't quite as cost efficient as holding the sub-holdings individually, but AVNV is international large cap value (AVIV) + international small cap value (AVDV) + emerging market value (AVES). I don't hold either of these funds so can't really comment on them (my international is AVDV + Fidelity index funds), but I know these fund-of-funds are popular as part of two-fund solutions over at Rationalreminder.

[Chocolatebar]

After doing a bit of research, it looks like AVNM (Avantis All International Markets Equity ETF) is exactly what I'm looking for. However, it's still relatively new and the AUM is quite small at this point. I'll definitely be keeping an eye on it.

Avantis has many funds and you can usually find what you're looking for. For example, Avantis offers both AVGV (Avantis All Equity Markets Value ET) and AVNV (Avantis All International Markets Value ETF). Both are fund-of-funds so aren't quite as cost efficient as holding the sub-holdings individually, but AVNV is international large cap value (AVIV) + international small cap value (AVDV) + emerging market value (AVES). I don't hold either of these funds so can't really comment on them (my international is AVDV + Fidelity index funds), but I know these fund-of-funds are popular as part of two-fund solutions over at Rationalreminder.

Yes, AVNV looks appealing as well. I understand that it's a fund-of-funds, which isn't as cost-efficient, but I highly value the simplicity of fewer funds and consistent holdings across account types. It's unfortunate, though, that I seem to be in the minority, given the small AUMs of these solutions.

Edit: Actually, I overlooked that AVNV only covers LCV. Since I’m also interested in international large-cap growth, AVNM seems like a much better fit as a potential replacement for VXUS—assuming its tax efficiency justifies the cost. However, I’m not a fan of its LCV tilt with AVIV.

[heyyou]

DGEIX is a single fund with global exposure instead of the solely foreign exposure requested by the OP.