ownership of "small cap value" stocks

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Longtermgrowth
Posts: 341
Joined: Thu Nov 26, 2015 1:59 pm

Re: ownership of "small cap value" stocks

Post by Longtermgrowth » Tue Sep 12, 2017 9:54 pm

rkhusky wrote:
Tue Sep 12, 2017 3:01 pm
It would be interesting to know if this were true or not. Will hedge and/or quant funds stay in until they don't see short term gains or are they in for the long haul? Presumably funds like DFA SV are in for the long haul, but what about investors in DFA SV or similar? Investors in TSM presumably don't care about factors, at least in that part of their portfolio. If the majority of investors are in for the long haul, would that eliminate the premium? Does the premium depend on lots of impatient investors buying and selling?
I have a feeling hedge funds will take the gains when they can get them to fund redemptions, though I can't imagine they would completely sell off the asset class. The investors in DFA generally have to go through an advisor, who should be able to persuade them to stay the course. I'm thinking avalpert hit the nail on the head in the post above, and that the risk premium will keep paying off in the future.

Regarding my post about the P/E of various small value funds, just look up small growth. The P/E is higher and the P/B is much higher. It would be interesting to know the average historic P/E and P/B of small value and compare it to today's numbers.

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