Ex DFA CIO launches competitor which will also have ETFs

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
User avatar
305pelusa
Posts: 1412
Joined: Fri Nov 16, 2018 10:20 pm

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

Post by 305pelusa » Mon Dec 16, 2019 2:58 pm

nedsaid wrote:
Mon Dec 16, 2019 2:49 pm
305pelusa wrote:
Mon Dec 16, 2019 1:57 pm
I might’ve missed it earlier but why is there some expectations that these will behave or perform like DFA? Why do people keep saying they’re happy DFA now has competition? This implies these ETFs are much more like DFA funds than the already-existing choices.

The only thing I heard is these guys worked at DFA before. Is that it? Do we know if they were even that well prepared/vital/important at DFA?

Thanks
A couple of reasons folks are happy that DFA has competition. First, DFA Funds needed an Advisor to access. The DFA-like Avantis ETFs are available for direct investment by do-it-yourself investors. The Avantis Mutual Funds will need an Advisor to access, just like DFA. Second, there is some feeling that time has passed DFA by and that a competitor might spur them on to improve.

American Century Investments have made a pretty substantial commitment to Avantis including hiring a lot of former DFA employees. It looks like Avantis is tweaking what DFA was doing. It appears to me that they are adding using Quality as well as Value in their screening. Their US Small Value product has a lot of Micro-Caps in it. So they are like DFA used to be before the asset bloat.
I wasn’t asking why people are happy DFA is getting competition. I was asking what about Avantis makes it DFA-competition while all other offers by Vanguard/iShares/etc weren’t considered as such. Because just hirring ex-DFA employees doesn’t convince me for many reasons.

Could you briefly mention what it is that DFA was doing that makes them especial and how you can tell Avantis is doing that but tweaked? I looked at the offerings a while back and saw little about the methodology.

A fund like ISCF already includes quality, value and size. Why is ISCF not considered DFA competition while ADVD is? Again, that’s the part I’m missing.

User avatar
305pelusa
Posts: 1412
Joined: Fri Nov 16, 2018 10:20 pm

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

Post by 305pelusa » Mon Dec 16, 2019 3:05 pm

stan1 wrote:
Mon Dec 16, 2019 2:56 pm
305pelusa wrote:
Mon Dec 16, 2019 2:44 pm


I meant vital and important in the context of portfolio management, quantitative skills, etc. I don’t expect a CEO or COO of a mutual fund company to have any relevant investment skills.

Like, did 2-3 of the most important investment managers leave DFA to start this and that’s why people are saying these are DFA-like funds , but cheaper? I’m still missing the connection
Well DFA operates quant funds. Mr Repetto's resume is:
Repetto began his career in Dimensional's research department in 2000. He has assumed increasing responsibility over the years, serving as head of research and, in 2007, succeeding David Booth, chairman and a Dimensional founder, as chief investment officer. In 2009, he took on the additional role of co-chief executive officer with Booth, and was also elected director by the shareholders of Dimensional's U.S. funds complex. In 2010, he joined the firm's board of directors.
I'd assume he knows the business very well.
Everything in that description seems managerial. I’m sure he’s smart and he clearly has a quantitative background. But was he actually “in the trenches”, doing the research, coding and back testing strategies, programming optimization algorithms, etc? Or did he just oversee/lead the people who did that (the actual fund quants)?

User avatar
nedsaid
Posts: 13011
Joined: Fri Nov 23, 2012 12:33 pm

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

Post by nedsaid » Mon Dec 16, 2019 3:15 pm

305pelusa wrote:
Mon Dec 16, 2019 2:58 pm
nedsaid wrote:
Mon Dec 16, 2019 2:49 pm
305pelusa wrote:
Mon Dec 16, 2019 1:57 pm
I might’ve missed it earlier but why is there some expectations that these will behave or perform like DFA? Why do people keep saying they’re happy DFA now has competition? This implies these ETFs are much more like DFA funds than the already-existing choices.

The only thing I heard is these guys worked at DFA before. Is that it? Do we know if they were even that well prepared/vital/important at DFA?

Thanks
A couple of reasons folks are happy that DFA has competition. First, DFA Funds needed an Advisor to access. The DFA-like Avantis ETFs are available for direct investment by do-it-yourself investors. The Avantis Mutual Funds will need an Advisor to access, just like DFA. Second, there is some feeling that time has passed DFA by and that a competitor might spur them on to improve.

American Century Investments have made a pretty substantial commitment to Avantis including hiring a lot of former DFA employees. It looks like Avantis is tweaking what DFA was doing. It appears to me that they are adding using Quality as well as Value in their screening. Their US Small Value product has a lot of Micro-Caps in it. So they are like DFA used to be before the asset bloat.
I wasn’t asking why people are happy DFA is getting competition. I was asking what about Avantis makes it DFA-competition while all other offers by Vanguard/iShares/etc weren’t considered as such. Because just hirring ex-DFA employees doesn’t convince me for many reasons.

Could you briefly mention what it is that DFA was doing that makes them especial and how you can tell Avantis is doing that but tweaked? I looked at the offerings a while back and saw little about the methodology.

A fund like ISCF already includes quality, value and size. Why is ISCF not considered DFA competition while ADVD is? Again, that’s the part I’m missing.
Not sure you are missing anything. DFA was the pioneer in factor investing and now there are other low-cost factor products out there particularly ETFs. DFA was at one time the Gold Standard for factor investing. There was a pretty good thread regarding newer Vanguard factor products that have come out and the response from the respected factorheads on the forum has been positive. Vanguard has its guns trained on DFA now too. So it might be that DFA is no longer anything special, even in the factor world. Avantis may or may not be an improvement upon the DFA products and DFA processes. Everyone out there seems to believe they have the "secret sauce" that will beat the market.

In fairness to DFA, the Academic Research is pretty widely published and there isn't much in the way of secrets anymore. Lots of folks doing factor products now at relatively low cost. Lots of bright people armed with great computer software and hardware crunching numbers 24/7. DFA may no longer have a competitive edge but just reputation.

Also in the Large Growth environment we have had over the last decade or so, I have discussed how the "bad" factor products with their higher market caps and less Value loading have been beating the "good" factor products. For example, Vanguard Small Cap Value Index (based on CRSP index) has been beating the DFA product. There is a lot of nuance to all of this and weaknesses to whatever factor products you choose to buy.
A fool and his money are good for business.

User avatar
nedsaid
Posts: 13011
Joined: Fri Nov 23, 2012 12:33 pm

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

Post by nedsaid » Mon Dec 16, 2019 3:21 pm

305pelusa wrote:
Mon Dec 16, 2019 3:05 pm
stan1 wrote:
Mon Dec 16, 2019 2:56 pm
305pelusa wrote:
Mon Dec 16, 2019 2:44 pm


I meant vital and important in the context of portfolio management, quantitative skills, etc. I don’t expect a CEO or COO of a mutual fund company to have any relevant investment skills.

Like, did 2-3 of the most important investment managers leave DFA to start this and that’s why people are saying these are DFA-like funds , but cheaper? I’m still missing the connection
Well DFA operates quant funds. Mr Repetto's resume is:
Repetto began his career in Dimensional's research department in 2000. He has assumed increasing responsibility over the years, serving as head of research and, in 2007, succeeding David Booth, chairman and a Dimensional founder, as chief investment officer. In 2009, he took on the additional role of co-chief executive officer with Booth, and was also elected director by the shareholders of Dimensional's U.S. funds complex. In 2010, he joined the firm's board of directors.
I'd assume he knows the business very well.
Everything in that description seems managerial. I’m sure he’s smart and he clearly has a quantitative background. But was he actually “in the trenches”, doing the research, coding and back testing strategies, programming optimization algorithms, etc? Or did he just oversee/lead the people who did that (the actual fund quants)?
Avantis has hired a number of folks from DFA, I follow Avantis on Linked-In and they seem to have hired a bunch of former DFA employees with the type of backgrounds mentioned above. I am sure they have folks who have been in the trenches. American Century was one of the pioneers in Quantitative investing, their founder James Stowers wrote the original program that identified those companies with accelerating earnings. It gave them a tremendous edge for a while but others have come up with programs to screen stocks. So I am pretty certain these guys are all in on all the Quant stuff, it is pretty ingrained in the parent company culture. They are one of the firms that hires Math PhDs. So I wouldn't be too concerned about this.
A fool and his money are good for business.

User avatar
305pelusa
Posts: 1412
Joined: Fri Nov 16, 2018 10:20 pm

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

Post by 305pelusa » Mon Dec 16, 2019 3:48 pm

nedsaid wrote:
Mon Dec 16, 2019 3:21 pm
305pelusa wrote:
Mon Dec 16, 2019 3:05 pm
stan1 wrote:
Mon Dec 16, 2019 2:56 pm
305pelusa wrote:
Mon Dec 16, 2019 2:44 pm


I meant vital and important in the context of portfolio management, quantitative skills, etc. I don’t expect a CEO or COO of a mutual fund company to have any relevant investment skills.

Like, did 2-3 of the most important investment managers leave DFA to start this and that’s why people are saying these are DFA-like funds , but cheaper? I’m still missing the connection
Well DFA operates quant funds. Mr Repetto's resume is:
Repetto began his career in Dimensional's research department in 2000. He has assumed increasing responsibility over the years, serving as head of research and, in 2007, succeeding David Booth, chairman and a Dimensional founder, as chief investment officer. In 2009, he took on the additional role of co-chief executive officer with Booth, and was also elected director by the shareholders of Dimensional's U.S. funds complex. In 2010, he joined the firm's board of directors.
I'd assume he knows the business very well.
Everything in that description seems managerial. I’m sure he’s smart and he clearly has a quantitative background. But was he actually “in the trenches”, doing the research, coding and back testing strategies, programming optimization algorithms, etc? Or did he just oversee/lead the people who did that (the actual fund quants)?
Avantis has hired a number of folks from DFA, I follow Avantis on Linked-In and they seem to have hired a bunch of former DFA employees with the type of backgrounds mentioned above. I am sure they have folks who have been in the trenches. American Century was one of the pioneers in Quantitative investing, their founder James Stowers wrote the original program that identified those companies with accelerating earnings. It gave them a tremendous edge for a while but others have come up with programs to screen stocks. So I am pretty certain these guys are all in on all the Quant stuff, it is pretty ingrained in the parent company culture. They are one of the firms that hires Math PhDs. So I wouldn't be too concerned about this.
Thank you for your response

MotoTrojan
Posts: 8163
Joined: Wed Feb 01, 2017 8:39 pm

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

Post by MotoTrojan » Mon Dec 16, 2019 4:01 pm

I guess I thought of this and DFA as a more pure value/size factor play. FNDC is fundamental, DLS dividend, ISCF multi-factor. Is this not one of the more pure exposures?

User avatar
whodidntante
Posts: 7270
Joined: Thu Jan 21, 2016 11:11 pm
Location: outside the echo chamber

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

Post by whodidntante » Mon Dec 16, 2019 7:53 pm

305pelusa wrote:
Mon Dec 16, 2019 2:58 pm
I wasn’t asking why people are happy DFA is getting competition. I was asking what about Avantis makes it DFA-competition while all other offers by Vanguard/iShares/etc weren’t considered as such. Because just hirring ex-DFA employees doesn’t convince me for many reasons.

Could you briefly mention what it is that DFA was doing that makes them especial and how you can tell Avantis is doing that but tweaked? I looked at the offerings a while back and saw little about the methodology.

A fund like ISCF already includes quality, value and size. Why is ISCF not considered DFA competition while ADVD is? Again, that’s the part I’m missing.
I have said these funds need seasoning before I'll buy them. But there's no need to get salty. :D

I don't know if these funds are any good or not. Appeal to authority (the DFA ivory tower) does nothing to convince me either. I'm not going to dissect the holdings to determine if they were screened according to factors in well-supported models. And I'm not going to check in a month to see if they still are. So I'm going to be lazy and let the data come to me, in the form of a statistically significant factor regression which won't be available for a while yet. :beer

User avatar
305pelusa
Posts: 1412
Joined: Fri Nov 16, 2018 10:20 pm

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

Post by 305pelusa » Mon Dec 16, 2019 10:37 pm

whodidntante wrote:
Mon Dec 16, 2019 7:53 pm
305pelusa wrote:
Mon Dec 16, 2019 2:58 pm
I wasn’t asking why people are happy DFA is getting competition. I was asking what about Avantis makes it DFA-competition while all other offers by Vanguard/iShares/etc weren’t considered as such. Because just hirring ex-DFA employees doesn’t convince me for many reasons.

Could you briefly mention what it is that DFA was doing that makes them especial and how you can tell Avantis is doing that but tweaked? I looked at the offerings a while back and saw little about the methodology.

A fund like ISCF already includes quality, value and size. Why is ISCF not considered DFA competition while ADVD is? Again, that’s the part I’m missing.
I have said these funds need seasoning before I'll buy them. But there's no need to get salty. :D

I don't know if these funds are any good or not. Appeal to authority (the DFA ivory tower) does nothing to convince me either. I'm not going to dissect the holdings to determine if they were screened according to factors in well-supported models. And I'm not going to check in a month to see if they still are. So I'm going to be lazy and let the data come to me, in the form of a statistically significant factor regression which won't be available for a while yet. :beer
I didn't mean to sound salty but you summarized my point well; I'm not convinced at all by the appeal to authority about ex-DFA employees.

User avatar
jhfenton
Posts: 4501
Joined: Sat Feb 07, 2015 11:17 am
Location: Ohio

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

Post by jhfenton » Tue Dec 17, 2019 1:59 pm

MotoTrojan wrote:
Mon Dec 16, 2019 4:01 pm
I guess I thought of this and DFA as a more pure value/size factor play. FNDC is fundamental, DLS dividend, ISCF multi-factor. Is this not one of the more pure exposures?
My first impression--based solely on portfolio characteristics--is that the exposures aren't that pure. Much like the iShares multi-factor funds, they appear to have sector and country constraints to reduce tracking error and make them more palatable to retail clients. (I'm afraid that may be a consequence of launching ETFs that don't come with gatekeepers.)

Maybe something will show up in the regressions after a few years of data, but I'm not placing my bets in that direction.

Bulgogi Head
Posts: 56
Joined: Thu Dec 21, 2017 7:45 pm

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

Post by Bulgogi Head » Sun Jan 05, 2020 1:19 pm

Interesting thread thus far. Does there seem to be any consensus around whether these funds are appropriate for the international small cap value and emerging markets space?

User avatar
nedsaid
Posts: 13011
Joined: Fri Nov 23, 2012 12:33 pm

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

Post by nedsaid » Sun Jan 05, 2020 5:33 pm

I have a good chunk of my retirement at Fidelity and now that all ETF trades are commission free, I have an opportunity to switch to Avantis ETF products if I so desire. For the Small Cap Value space, I own the iShares S&P 600 Small Cap Value Index ETF for US and Wisdom Tree International Small Cap Dividend ETF for International. I did comparisons with the Avantis products and determined that I what I have now is plenty well good enough. So I am staying put for now.

Larry Swedroe likes the new Avantis ETF and mutual fund products and says they are well constructed. So if you are a factor junkie who would like the latest and greatest, these are good products. Not sure they are better than what I already own.
A fool and his money are good for business.

Bulgogi Head
Posts: 56
Joined: Thu Dec 21, 2017 7:45 pm

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

Post by Bulgogi Head » Sun Jan 05, 2020 7:02 pm

nedsaid wrote:
Sun Jan 05, 2020 5:33 pm
I have a good chunk of my retirement at Fidelity and now that all ETF trades are commission free, I have an opportunity to switch to Avantis ETF products if I so desire. For the Small Cap Value space, I own the iShares S&P 600 Small Cap Value Index ETF for US and Wisdom Tree International Small Cap Dividend ETF for International. I did comparisons with the Avantis products and determined that I what I have now is plenty well good enough. So I am staying put for now.

Larry Swedroe likes the new Avantis ETF and mutual fund products and says they are well constructed. So if you are a factor junkie who would like the latest and greatest, these are good products. Not sure they are better than what I already own.
From reviewing the thread, it looks like you primarily chose to tick with DLS over AVDV because DLS loads better on size? Since the AVDV ETF is relatively new, has any other information emerged since your quoted post that has also contributed to the decision?

User avatar
nedsaid
Posts: 13011
Joined: Fri Nov 23, 2012 12:33 pm

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

Post by nedsaid » Tue Jan 07, 2020 9:53 pm

Bulgogi Head wrote:
Sun Jan 05, 2020 7:02 pm
nedsaid wrote:
Sun Jan 05, 2020 5:33 pm
I have a good chunk of my retirement at Fidelity and now that all ETF trades are commission free, I have an opportunity to switch to Avantis ETF products if I so desire. For the Small Cap Value space, I own the iShares S&P 600 Small Cap Value Index ETF for US and Wisdom Tree International Small Cap Dividend ETF for International. I did comparisons with the Avantis products and determined that I what I have now is plenty well good enough. So I am staying put for now.

Larry Swedroe likes the new Avantis ETF and mutual fund products and says they are well constructed. So if you are a factor junkie who would like the latest and greatest, these are good products. Not sure they are better than what I already own.
From reviewing the thread, it looks like you primarily chose to tick with DLS over AVDV because DLS loads better on size? Since the AVDV ETF is relatively new, has any other information emerged since your quoted post that has also contributed to the decision?
The information that I used for comparison came from Morningstar. Just eyeballing that data, I didn't see a compelling reason to switch to Avantis at this time. Not saying anything bad about the Avantis products.

There is a lot of nuance to evaluating factor products, for example Avantis has tweaked the calculation of book value to provide, in their view, a better measurement of Value. There is also disagreement over the interpretation of the numbers. Not so easy to sort out the differences of opinion over measurement, definition of terms, and interpretation of data. It gets to be like a debate between learned theologians. You are also seeing folks re-evaluating the whole idea of factors. For example, Rick Ferri is expressing doubts about factors and sort of becoming a reincarnated John Bogle, Rick used to be a huge advocate for Small/Value tilting. He has all but left the Church of Factor Investing.

I have always had a taste for Value and for smaller Mid/Small-Cap stocks. No plans to change my investing style. Just tired of carefully picking factor investments with advice from experts only to be told by other experts that I picked the wrong investments. Probably better to stick with what I have rather than switching back and forth with each opinion of an expert.
A fool and his money are good for business.

MotoTrojan
Posts: 8163
Joined: Wed Feb 01, 2017 8:39 pm

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

Post by MotoTrojan » Mon Jan 27, 2020 5:41 pm

nedsaid wrote:
Tue Jan 07, 2020 9:53 pm
Bulgogi Head wrote:
Sun Jan 05, 2020 7:02 pm
nedsaid wrote:
Sun Jan 05, 2020 5:33 pm
I have a good chunk of my retirement at Fidelity and now that all ETF trades are commission free, I have an opportunity to switch to Avantis ETF products if I so desire. For the Small Cap Value space, I own the iShares S&P 600 Small Cap Value Index ETF for US and Wisdom Tree International Small Cap Dividend ETF for International. I did comparisons with the Avantis products and determined that I what I have now is plenty well good enough. So I am staying put for now.

Larry Swedroe likes the new Avantis ETF and mutual fund products and says they are well constructed. So if you are a factor junkie who would like the latest and greatest, these are good products. Not sure they are better than what I already own.
From reviewing the thread, it looks like you primarily chose to tick with DLS over AVDV because DLS loads better on size? Since the AVDV ETF is relatively new, has any other information emerged since your quoted post that has also contributed to the decision?
The information that I used for comparison came from Morningstar. Just eyeballing that data, I didn't see a compelling reason to switch to Avantis at this time. Not saying anything bad about the Avantis products.

There is a lot of nuance to evaluating factor products, for example Avantis has tweaked the calculation of book value to provide, in their view, a better measurement of Value. There is also disagreement over the interpretation of the numbers. Not so easy to sort out the differences of opinion over measurement, definition of terms, and interpretation of data. It gets to be like a debate between learned theologians. You are also seeing folks re-evaluating the whole idea of factors. For example, Rick Ferri is expressing doubts about factors and sort of becoming a reincarnated John Bogle, Rick used to be a huge advocate for Small/Value tilting. He has all but left the Church of Factor Investing.

I have always had a taste for Value and for smaller Mid/Small-Cap stocks. No plans to change my investing style. Just tired of carefully picking factor investments with advice from experts only to be told by other experts that I picked the wrong investments. Probably better to stick with what I have rather than switching back and forth with each opinion of an expert.
All well said. I am considering just consolidating my ex-US SCV into FNDC (currently close to 50/50 with AVDV). I feel drawn to the Fundamental Index philosophy, probably because it is intuitive and I understand it better. FNDC is much more liquid and could be held in taxable. My main draw to AVDV is emotional - "DFA is the best, Larry thinks this is a cheap DFA worth holding". If I were just looking to tilt a larger International exposure I would be more intrigued by AVDV as it has a considerably smaller median market-cap, but I am putting almost all of my ex-US in SCV, so FNDC's size is not as big of a deterrent.

Who knows; maybe I am just scratching my itch to tinker, but it isn't changing my overall AA and it will make future contributions seamless with no need to decide whether to contribute to AVDV or FNDC.

User avatar
nedsaid
Posts: 13011
Joined: Fri Nov 23, 2012 12:33 pm

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

Post by nedsaid » Wed Jan 29, 2020 12:01 am

MotoTrojan wrote:
Mon Jan 27, 2020 5:41 pm
nedsaid wrote:
Tue Jan 07, 2020 9:53 pm
Bulgogi Head wrote:
Sun Jan 05, 2020 7:02 pm
nedsaid wrote:
Sun Jan 05, 2020 5:33 pm
I have a good chunk of my retirement at Fidelity and now that all ETF trades are commission free, I have an opportunity to switch to Avantis ETF products if I so desire. For the Small Cap Value space, I own the iShares S&P 600 Small Cap Value Index ETF for US and Wisdom Tree International Small Cap Dividend ETF for International. I did comparisons with the Avantis products and determined that I what I have now is plenty well good enough. So I am staying put for now.

Larry Swedroe likes the new Avantis ETF and mutual fund products and says they are well constructed. So if you are a factor junkie who would like the latest and greatest, these are good products. Not sure they are better than what I already own.
From reviewing the thread, it looks like you primarily chose to tick with DLS over AVDV because DLS loads better on size? Since the AVDV ETF is relatively new, has any other information emerged since your quoted post that has also contributed to the decision?
The information that I used for comparison came from Morningstar. Just eyeballing that data, I didn't see a compelling reason to switch to Avantis at this time. Not saying anything bad about the Avantis products.

There is a lot of nuance to evaluating factor products, for example Avantis has tweaked the calculation of book value to provide, in their view, a better measurement of Value. There is also disagreement over the interpretation of the numbers. Not so easy to sort out the differences of opinion over measurement, definition of terms, and interpretation of data. It gets to be like a debate between learned theologians. You are also seeing folks re-evaluating the whole idea of factors. For example, Rick Ferri is expressing doubts about factors and sort of becoming a reincarnated John Bogle, Rick used to be a huge advocate for Small/Value tilting. He has all but left the Church of Factor Investing.

I have always had a taste for Value and for smaller Mid/Small-Cap stocks. No plans to change my investing style. Just tired of carefully picking factor investments with advice from experts only to be told by other experts that I picked the wrong investments. Probably better to stick with what I have rather than switching back and forth with each opinion of an expert.
All well said. I am considering just consolidating my ex-US SCV into FNDC (currently close to 50/50 with AVDV). I feel drawn to the Fundamental Index philosophy, probably because it is intuitive and I understand it better. FNDC is much more liquid and could be held in taxable. My main draw to AVDV is emotional - "DFA is the best, Larry thinks this is a cheap DFA worth holding". If I were just looking to tilt a larger International exposure I would be more intrigued by AVDV as it has a considerably smaller median market-cap, but I am putting almost all of my ex-US in SCV, so FNDC's size is not as big of a deterrent.

Who knows; maybe I am just scratching my itch to tinker, but it isn't changing my overall AA and it will make future contributions seamless with no need to decide whether to contribute to AVDV or FNDC.
Close enough is close enough and good enough is good enough. We can endlessly parse the data and argue over the "best" factor products. Certainly I want products that are well constructed but it seems that the differences between the better factor products are getting more and more subtle. I guess my palate isn't refined enough, can't tell the difference in taste among the various factor products. Sort of like the choices of coffees now in a fancy coffee shop, some of them I can't even pronounce. I suppose specialized investment products have their own snob appeal.
A fool and his money are good for business.

MotoTrojan
Posts: 8163
Joined: Wed Feb 01, 2017 8:39 pm

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

Post by MotoTrojan » Wed Jan 29, 2020 10:48 am

nedsaid wrote:
Wed Jan 29, 2020 12:01 am
MotoTrojan wrote:
Mon Jan 27, 2020 5:41 pm
nedsaid wrote:
Tue Jan 07, 2020 9:53 pm
Bulgogi Head wrote:
Sun Jan 05, 2020 7:02 pm
nedsaid wrote:
Sun Jan 05, 2020 5:33 pm
I have a good chunk of my retirement at Fidelity and now that all ETF trades are commission free, I have an opportunity to switch to Avantis ETF products if I so desire. For the Small Cap Value space, I own the iShares S&P 600 Small Cap Value Index ETF for US and Wisdom Tree International Small Cap Dividend ETF for International. I did comparisons with the Avantis products and determined that I what I have now is plenty well good enough. So I am staying put for now.

Larry Swedroe likes the new Avantis ETF and mutual fund products and says they are well constructed. So if you are a factor junkie who would like the latest and greatest, these are good products. Not sure they are better than what I already own.
From reviewing the thread, it looks like you primarily chose to tick with DLS over AVDV because DLS loads better on size? Since the AVDV ETF is relatively new, has any other information emerged since your quoted post that has also contributed to the decision?
The information that I used for comparison came from Morningstar. Just eyeballing that data, I didn't see a compelling reason to switch to Avantis at this time. Not saying anything bad about the Avantis products.

There is a lot of nuance to evaluating factor products, for example Avantis has tweaked the calculation of book value to provide, in their view, a better measurement of Value. There is also disagreement over the interpretation of the numbers. Not so easy to sort out the differences of opinion over measurement, definition of terms, and interpretation of data. It gets to be like a debate between learned theologians. You are also seeing folks re-evaluating the whole idea of factors. For example, Rick Ferri is expressing doubts about factors and sort of becoming a reincarnated John Bogle, Rick used to be a huge advocate for Small/Value tilting. He has all but left the Church of Factor Investing.

I have always had a taste for Value and for smaller Mid/Small-Cap stocks. No plans to change my investing style. Just tired of carefully picking factor investments with advice from experts only to be told by other experts that I picked the wrong investments. Probably better to stick with what I have rather than switching back and forth with each opinion of an expert.
All well said. I am considering just consolidating my ex-US SCV into FNDC (currently close to 50/50 with AVDV). I feel drawn to the Fundamental Index philosophy, probably because it is intuitive and I understand it better. FNDC is much more liquid and could be held in taxable. My main draw to AVDV is emotional - "DFA is the best, Larry thinks this is a cheap DFA worth holding". If I were just looking to tilt a larger International exposure I would be more intrigued by AVDV as it has a considerably smaller median market-cap, but I am putting almost all of my ex-US in SCV, so FNDC's size is not as big of a deterrent.

Who knows; maybe I am just scratching my itch to tinker, but it isn't changing my overall AA and it will make future contributions seamless with no need to decide whether to contribute to AVDV or FNDC.
Close enough is close enough and good enough is good enough. We can endlessly parse the data and argue over the "best" factor products. Certainly I want products that are well constructed but it seems that the differences between the better factor products are getting more and more subtle. I guess my palate isn't refined enough, can't tell the difference in taste among the various factor products. Sort of like the choices of coffees now in a fancy coffee shop, some of them I can't even pronounce. I suppose specialized investment products have their own snob appeal.
Well said. Consolidated my AVDV in to FNDC this morning. Yay simplification. AVDV had outperformed since the purchase so I didn’t mind the small bid/ask spread loss.

User avatar
andromeda2k12
Posts: 40
Joined: Sun Oct 13, 2019 10:22 pm

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

Post by andromeda2k12 » Wed Jan 29, 2020 11:57 am

Bulgogi Head wrote:
Sun Jan 05, 2020 1:19 pm
Interesting thread thus far. Does there seem to be any consensus around whether these funds are appropriate for the international small cap value and emerging markets space?
AVDV is the most compelling due to the low ER in comparison to DLS. Others are using FNDC though too. AVDV certainly is a good option granted the company is so new and has no track record. Personally I’m waiting a year to let things develop more before deciding on it.

guyinlaw
Posts: 335
Joined: Wed Jul 03, 2019 9:54 am

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

Post by guyinlaw » Fri Feb 14, 2020 6:54 am

Anyone buying their US ETFs or funds?

AVUS Avantis U.S. Equity ETF
AVUV Avantis U.S. Small Cap Value ETF

Expense ratios are pretty good and AUM growing well.

https://www.avantisinvestors.com/conten ... ents.html

caklim00
Posts: 2030
Joined: Mon May 26, 2008 10:09 am

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

Post by caklim00 » Fri Feb 14, 2020 10:10 am

guyinlaw wrote:
Fri Feb 14, 2020 6:54 am
Anyone buying their US ETFs or funds?

AVUS Avantis U.S. Equity ETF
AVUV Avantis U.S. Small Cap Value ETF

Expense ratios are pretty good and AUM growing well.

https://www.avantisinvestors.com/conten ... ents.html
I have a small amount in kids utmas. I still hold slyv in my roths. Hopefully these funds survive as I could easily see one day holding an avuv/avdv portfolio.

MotoTrojan
Posts: 8163
Joined: Wed Feb 01, 2017 8:39 pm

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

Post by MotoTrojan » Fri Feb 14, 2020 1:59 pm

guyinlaw wrote:
Fri Feb 14, 2020 6:54 am
Anyone buying their US ETFs or funds?

AVUS Avantis U.S. Equity ETF
AVUV Avantis U.S. Small Cap Value ETF

Expense ratios are pretty good and AUM growing well.

https://www.avantisinvestors.com/conten ... ents.html
I simplified out of AVDV to go all-in with FNDC abroad. Haven't considered using them domestically but they are interesting looking funds. AVUV seems to be worth the slightly higher ER for a deeper value tilt than you can get from S&P600 funds but I'm not making the change myself. I am interested to see how AVUS performs as I recently started buying FNDX (Fundamental index) instead of Total US or S&P500 funds outside of my 401k; just going off of P/B it looks like FNDX has a heavier value tilt right now than AVUS which would explain why since inception of AVUS it has split the difference between FNDX and S&P500. AVUS is clearly still a large-cap fund but does tilt a bit lower there with a median-cap a bit below FNDX, and well below the S&P500.

MotoTrojan
Posts: 8163
Joined: Wed Feb 01, 2017 8:39 pm

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

Post by MotoTrojan » Wed Feb 19, 2020 5:46 pm

DFA question but: What is the story with DFISX? While this is just a regular small-cap fund, it seems to have a strong value tilt and follows closely with DLS & FNDC while the small-value international fund has a much lower P/B.

It is available in my HSA and would prefer to hold it there rather than S&P500 so I can make other tilts there.

schismal
Posts: 181
Joined: Sat Apr 13, 2019 8:53 pm

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

Post by schismal » Thu Feb 20, 2020 7:42 am

MotoTrojan wrote:
Wed Feb 19, 2020 5:46 pm
DFA question but: What is the story with DFISX? While this is just a regular small-cap fund, it seems to have a strong value tilt and follows closely with DLS & FNDC while the small-value international fund has a much lower P/B.

It is available in my HSA and would prefer to hold it there rather than S&P500 so I can make other tilts there.
From what I can see, DFISX had a decent value tilt in the past, but has had a neutral value loading over the past decade. I do hold this fund in my 403b, since it's the best small cap international option available.

MotoTrojan
Posts: 8163
Joined: Wed Feb 01, 2017 8:39 pm

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

Post by MotoTrojan » Thu Feb 20, 2020 2:46 pm

schismal wrote:
Thu Feb 20, 2020 7:42 am
MotoTrojan wrote:
Wed Feb 19, 2020 5:46 pm
DFA question but: What is the story with DFISX? While this is just a regular small-cap fund, it seems to have a strong value tilt and follows closely with DLS & FNDC while the small-value international fund has a much lower P/B.

It is available in my HSA and would prefer to hold it there rather than S&P500 so I can make other tilts there.
From what I can see, DFISX had a decent value tilt in the past, but has had a neutral value loading over the past decade. I do hold this fund in my 403b, since it's the best small cap international option available.
I didn't run any regressions but current P/B at-least seemed to be closer to other value funds like DLS & FNDC than the overall small-index. Returns to those two funds are also near identical. DISVX certainly has a more extreme tilt with a minuscule P/B. I am trying to move my large-cap US towards value leaning funds as well (FNDX specifically) so holding something other than S&P500 in my HSA will help make some room for future contributions to go towards these tilts, and DFISX seems to fit the bill.

Post Reply