Small cap value vs. total market?

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livesoft
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Joined: Thu Mar 01, 2007 8:00 pm

Re: Small cap value vs. total market?

Post by livesoft » Fri Jan 12, 2018 9:46 pm

Yesterday at one point IJS was up more than 2% when everything else wasn't. So I sold some shares. But what to do with the money? Well, VSS was up the least, so I used the money to buy VSS. And today VSS was up more than 1% while IJS was up less than VTI (total market).

Of course, I wouldn't be telling you this if I had not made more money than doing nothing. :twisted:

But now I am underweight US small-cap value and overweight foreign equities, so next week I will have to fix that. I hope IJS drops big-time on Tuesday morning, but I am not holding my breath.
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Dead Man Walking
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Joined: Wed Nov 07, 2007 6:51 pm

Re: Small cap value vs. total market?

Post by Dead Man Walking » Sat Jan 13, 2018 2:34 am

Dead Man Walking wrote:
Fri Jan 05, 2018 10:49 pm
Will someone please show me performance statistics that show that retail small cap value mutual funds have outperformed retail small cap blend mutual funds over periods of time more than 15 years. I tilt toward small caps, but don't buy the small cap value argument. I think that the key is small caps period. Please remember that I want stats that are limited to retail mutual funds available to all investors. Academic stats that go back to 1926 are interesting; however, they are not relevant to most investors who invest in retail mutual funds. My point is that most people need information that they can apply to asset allocations in the real world. Thanks in advance to those who reply to this post.

DMW
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saltycaper
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Re: Small cap value vs. total market?

Post by saltycaper » Sat Jan 13, 2018 3:04 am

Dead Man Walking wrote:
Sat Jan 13, 2018 2:34 am
Dead Man Walking wrote:
Fri Jan 05, 2018 10:49 pm
Will someone please show me performance statistics that show that retail small cap value mutual funds have outperformed retail small cap blend mutual funds over periods of time more than 15 years. I tilt toward small caps, but don't buy the small cap value argument. I think that the key is small caps period. Please remember that I want stats that are limited to retail mutual funds available to all investors. Academic stats that go back to 1926 are interesting; however, they are not relevant to most investors who invest in retail mutual funds. My point is that most people need information that they can apply to asset allocations in the real world. Thanks in advance to those who reply to this post.

DMW
To date, no one has accepted my challenge. I am disappointed that no one has proven me wrong.

DMW
Well, not the comprehensive data you're looking for, but here's two retail funds over a particular >15-year time period chosen specifically for effect. If you go back to the inception of Vanguard Small Capitalization Value Index Fund Investor Shares (VISVX), it still outperforms Vanguard Small Capitalization Index Fund Investor Shares (NAESX) to date. Since these types of retail index funds or at least passive funds haven't been around too long (early 90s?), pretty much any comparison that includes the few years after the dot-com crash is going to favor small-cap value, and any comparison omitting that period is likely to show relatively close performance.

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Dead Man Walking
Posts: 547
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Re: Small cap value vs. total market?

Post by Dead Man Walking » Sat Jan 13, 2018 5:10 am

Saltycaper,

Thanks for responding. I've compared the performance of small cap funds using 15 year returns provided by Morningstar for several years. The difference between value, growth, and blend funds is usually around 1%. The difference usually depends on what segment of the market has been in favor during the recent years. My comparisons have not been limited to Vanguard Small Cap Funds. I have included DFA funds, Fidelity funds, and Vanguard Tax-managed Small Cap Fund (VTMSX). My current 15 year comparison shows the following results:

Fidelity Small Cap Discovery FSCRX 12.56%
Vanguard Tax-managed Small Cap VTSMX 12.32%
DFA Small Cap Value I DFSVX 12.05%
Vanguard Small Cap Index NAESX 11.96%
Vanguard Small Cap Growth Index VISGX 11.90%
Vanguard Small Cap Value Index VISVX 11.38%

Since growth is in vogue, the Vanguard blend and growth funds have been slightly better performers. My main point is that small cap is the relevant aspect of tilting to small caps - growth, value, or blend are choices the tilter can make. I favor blend because I think that whether growth or value is hot, I'll have acceptable performance.

DMW

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