Ex DFA CIO launches competitor which will also have ETFs

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

Post by pascalwager »

I'm now using AVDV (intl small cap value ETF) as a rebalancing partner with DFISX (intl small company fund) in an old DFA stock funds portfolio that hadn't been rebalanced since 2011--I'm not allowed to buy more DFA shares. AVDV is currently 12.9% of the revised portfolio (25% allocations of LV/SC/ISC/EM).
MotoTrojan
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Re: Ex DFA CIO launches competitor which will also have ETFs

Post by MotoTrojan »

pascalwager wrote: Wed Jul 29, 2020 11:37 am I'm now using AVDV (intl small cap value ETF) as a rebalancing partner with DFISX (intl small company fund) in an old DFA stock funds portfolio that hadn't been rebalanced since 2011--I'm not allowed to buy more DFA shares. AVDV is currently 12.9% of the revised portfolio (25% allocations of LV/SC/ISC/EM).
Nice choice. I would dump it all into AVDV myself.
calcada
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Re: Ex DFA CIO launches competitor which will also have ETFs

Post by calcada »

caklim00 wrote: Fri Mar 20, 2020 2:55 pm
MotoTrojan wrote: Thu Mar 19, 2020 6:02 am
I’m not sure that’s true. Some funds use derivatives to maintain exposure while holding cash to help with redemptions. I thought it was more prevalent in Mutual Funds though. I can’t imagine IJS has a 2% cash drag.
Someone needs to look into this. Its VIOV, not IJS that would have the cash drag. I'm surprissed though that Vanguard would be the one using derivatives...
So which one is the better fund to buy? I do not yet own SLYV or VIOV but I will choose and buy one of them as a long term holding for my domestic SCV allocation. They both track the same index and have the same ER. Its hard to choose between them.

Assuming non-taxable accounts and that both are available.
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vineviz
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Re: Ex DFA CIO launches competitor which will also have ETFs

Post by vineviz »

calcada wrote: Sat Sep 05, 2020 1:01 pm So which one is the better fund to buy? I do not yet own SLYV or VIOV but I will choose and buy one of them as a long term holding for my domestic SCV allocation. They both track the same index and have the same ER. Its hard to choose between them.
I can't envision any important criterion by which one could be judged as "better" than the other.

I use SLYV because it is commission-free at my broker, but few (none?) of the largest brokers are charging commissions to begin with, so I can't imagine that'd be a swing factor for many investors.

In a taxable account I might choose VIOV simply because Vanguard has a strong history of lower expense ratios proactively. In a tax-advantaged account, I'd say flip a coin.
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XacTactX
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Re: Ex DFA CIO launches competitor which will also have ETFs

Post by XacTactX »

calcada wrote: Sat Sep 05, 2020 1:01 pm
caklim00 wrote: Fri Mar 20, 2020 2:55 pm
MotoTrojan wrote: Thu Mar 19, 2020 6:02 am
I’m not sure that’s true. Some funds use derivatives to maintain exposure while holding cash to help with redemptions. I thought it was more prevalent in Mutual Funds though. I can’t imagine IJS has a 2% cash drag.
Someone needs to look into this. Its VIOV, not IJS that would have the cash drag. I'm surprissed though that Vanguard would be the one using derivatives...
So which one is the better fund to buy? I do not yet own SLYV or VIOV but I will choose and buy one of them as a long term holding for my domestic SCV allocation. They both track the same index and have the same ER. Its hard to choose between them.

Assuming non-taxable accounts and that both are available.
In a non-taxable account I think both VIOV and SLYV are equal, SLYV has a average volume of $10 million and VIOV has an average volume of $4 million, both should be pretty easy to trade. The issue with SLYV and its large STCG and LTCG distributions is not going to effect your taxes.

If anyone is trying to make this decision for a taxable account here is the background.

IJS vs SLYV vs VIOV 2011 - Present, scroll to the bottom and look at dividends.

SLYV dividend distributions in 2014, 2015, and 2017

Huge distributions in those years, a mixture of STCG and LTCG. To avoid that problem going forward I would avoid SLYV in a taxable account. I think it's a solid fund outside of that issue.

EDIT: Read what vineviz wrote below, SSGA is trying to fix this problem and it should not happen anymore.
Last edited by XacTactX on Sat Sep 05, 2020 2:37 pm, edited 2 times in total.
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vineviz
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Re: Ex DFA CIO launches competitor which will also have ETFs

Post by vineviz »

XacTactX wrote: Sat Sep 05, 2020 2:01 pm Huge distributions in those years, a mixture of STCG and LTCG. To avoid that problem going forward I would avoid SLYV in a taxable account. I think it's a solid fund outside of that issue.
Never say never, but State Street has acknowledged the problematic distributions and said in 2018 that they’d implemented processes that should allows them to avoid the issue going forward. I don’t think any of their ETFs has capital gains distributions last year, for example.

Looking forward, I genuinely don’t think any of these three funds is any more likely to present a tax efficiency issue than the others.
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Re: Ex DFA CIO launches competitor which will also have ETFs

Post by Northern Flicker »

calcada wrote: Sat Sep 05, 2020 1:01 pm
caklim00 wrote: Fri Mar 20, 2020 2:55 pm
MotoTrojan wrote: Thu Mar 19, 2020 6:02 am
I’m not sure that’s true. Some funds use derivatives to maintain exposure while holding cash to help with redemptions. I thought it was more prevalent in Mutual Funds though. I can’t imagine IJS has a 2% cash drag.
Someone needs to look into this. Its VIOV, not IJS that would have the cash drag. I'm surprissed though that Vanguard would be the one using derivatives...
So which one is the better fund to buy? I do not yet own SLYV or VIOV but I will choose and buy one of them as a long term holding for my domestic SCV allocation. They both track the same index and have the same ER. Its hard to choose between them.

Assuming non-taxable accounts and that both are available.
Vanguard returns 100% of securities lending revenue to investors. State Street does not. The fund legal structure for SLYV perhaps does not allow for heartbeat trades, so that capital gains are not as well managed, but the costs associated with managing capital gains are thus not realized unnecessarily by investors in tax-qualified accounts. I think the securities lending issue is bigger, particularly because the prospectus for SLYV only states that some of the securities lending revenue is shared with the fund, with no indication of the percentage retained by State Street. iShares returns 80% of securities lending revenue to investors in their funds, such as IJS.

My conclusion is that VIOV is the preferred choice in a tax-qualified account (or taxable account).
Risk is not a guarantor of return.
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vineviz
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Re: Ex DFA CIO launches competitor which will also have ETFs

Post by vineviz »

Northern Flicker wrote: Sat Sep 05, 2020 2:19 pm I think the securities lending issue is bigger, particularly because the prospectus for SLYV only states that some of the securities lending revenue is shared with the fund, with no indication of the percentage retained by State Street. iShares returns 80% of securities lending revenue to investors in their funds, such as IJS.
If securities lending revenue was a "big issue", there'd be a gap between the net investor return for the funds. However, over the past 24 months, the net return to investors from SLYV been 4 bps higher than VIOV. That is literally noise: even a gap 10x that large wouldn't be statistically significant.
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Re: Ex DFA CIO launches competitor which will also have ETFs

Post by Northern Flicker »

State Street does a higher volume of securities lending than Vanguard, up to 40% of fund assets per the State Street prospectus, so investors may be earning more SL revenue with State Street. But not returning all of the SL revenue to investors creates some uncompensated risk for the State Street investors.
Last edited by Northern Flicker on Sun Sep 06, 2020 7:19 pm, edited 2 times in total.
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pascalwager
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Re: Ex DFA CIO launches competitor which will also have ETFs

Post by pascalwager »

nedsaid wrote: Sat Sep 21, 2019 2:34 pm
cheezit wrote: Sat Sep 21, 2019 2:20 pm
nedsaid wrote: Sun Sep 15, 2019 10:07 am
Advantis US Equity Expense Ratio 0.15%
Advantis International Equity 0.23%
Advantis Emerging Markets Equity 0.33%
Advantis U.S. Small Cap Value 0.25%
Advantis International Small Cap Value 0.36%

If Vanguard's quantitative equity group someday makes ex-US analogs of VFMF and friends I might give them a look, but at these ERs I'm sticking with VSS + VXUS for international exposure in the meantime. Investors in domestic equities can get good exposure to a bunch of factors so cheaply by comparison.
I would say that Avantis is competitive with DFA in terms of fees. Remember you also have to look at how efficiently the different products load on factors. Vanguard is cheap but may not give you as good of factor exposure as DFA-like products. Anyways, this gets to be a pretty sophisticated argument pretty quickly. For a layman like me, not easy to tell what is better. If I want Small/Value tilting, I can want products with better Value characteristics and smaller market caps. Vanguard Small Cap Value Index has a lot of mid-caps and a lot of stocks outside the Value styleboxes but it is cheap and its performance has been very good. Certainly trade-offs are involved here.

Avantis will be yet another competitor in the factors universe. Hard to say what will do best going forwards.
I recall Gus Sauter saying in an interview that the Vanguard small value index fund was purposely managed to imitate common active SV management policies. Also, I owned a DFA value fund that targeted deciles 6 through 10, including a lot of mid-cap.

What is the actual, formal relationship between Avantis and AC? (I hold AVDV.) Is Avantis a "division" of AC?
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vineviz
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Re: Ex DFA CIO launches competitor which will also have ETFs

Post by vineviz »

pascalwager wrote: Sun Sep 06, 2020 4:22 pm I recall Gus Sauter saying in an interview that the Vanguard small value index fund was purposely managed to imitate common active SV management policies. Also, I owned a DFA value fund that targeted deciles 6 through 10, including a lot of mid-cap.
Although VBR definitely has smaller loadings on size and value it's low expense ratio is a pretty powerful offsetting consideration. For investors who are pursuing middle-of-the-the road tilts, VBR is pretty cost competitive.

For instance, if someone was happy with the factor exposures of a 50/50 portfolio of VTSMX and DFSVX they could get the same overall portfolio exposures with 75% VBR and 25% VTSMSX but with just 20% of the cost.
pascalwager wrote: Sun Sep 06, 2020 4:22 pm What is the actual, formal relationship between Avantis and AC? (I hold AVDV.) Is Avantis a "division" of AC?
Yes, it's basically a division of American Century. I've seen it called a "venture" and a "brand", but Repetto and Keating are employees of American Century.
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Re: Ex DFA CIO launches competitor which will also have ETFs

Post by XacTactX »

pascalwager wrote: Sun Sep 06, 2020 4:22 pm
I recall Gus Sauter saying in an interview that the Vanguard small value index fund was purposely managed to imitate common active SV management policies. Also, I owned a DFA value fund that targeted deciles 6 through 10, including a lot of mid-cap.

What is the actual, formal relationship between Avantis and AC? (I hold AVDV.) Is Avantis a "division" of AC?
American Century owns Avantis and gives Avantis the infrastructure and the tools they need to be able to do their job but when it comes to the investment strategy, the marketing, and the day to day operations the Avantis / former DFA people have full control.

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

Post by nedsaid »

pascalwager wrote: Sun Sep 06, 2020 4:22 pm
nedsaid wrote: Sat Sep 21, 2019 2:34 pm
cheezit wrote: Sat Sep 21, 2019 2:20 pm
nedsaid wrote: Sun Sep 15, 2019 10:07 am
Advantis US Equity Expense Ratio 0.15%
Advantis International Equity 0.23%
Advantis Emerging Markets Equity 0.33%
Advantis U.S. Small Cap Value 0.25%
Advantis International Small Cap Value 0.36%

If Vanguard's quantitative equity group someday makes ex-US analogs of VFMF and friends I might give them a look, but at these ERs I'm sticking with VSS + VXUS for international exposure in the meantime. Investors in domestic equities can get good exposure to a bunch of factors so cheaply by comparison.
I would say that Avantis is competitive with DFA in terms of fees. Remember you also have to look at how efficiently the different products load on factors. Vanguard is cheap but may not give you as good of factor exposure as DFA-like products. Anyways, this gets to be a pretty sophisticated argument pretty quickly. For a layman like me, not easy to tell what is better. If I want Small/Value tilting, I can want products with better Value characteristics and smaller market caps. Vanguard Small Cap Value Index has a lot of mid-caps and a lot of stocks outside the Value styleboxes but it is cheap and its performance has been very good. Certainly trade-offs are involved here.

Avantis will be yet another competitor in the factors universe. Hard to say what will do best going forwards.
I recall Gus Sauter saying in an interview that the Vanguard small value index fund was purposely managed to imitate common active SV management policies. Also, I owned a DFA value fund that targeted deciles 6 through 10, including a lot of mid-cap.

What is the actual, formal relationship between Avantis and AC? (I hold AVDV.) Is Avantis a "division" of AC?
Avantis is a subsidiary of American Century Investments, it has available to it resources of the mother company but it operates independently. American Century is headquartered in Kansas City, Missouri and has a big presence in Mountain View, California which was the headquarters of Benham Mutual funds, which merged with Twentieth Century Investors to become American Century back in 1996. American Century also has offices in New York City. Avantis is located in Los Angeles, California.

Avantis has its own team of managers and analysts. I suppose they get IT and other support from the mother company.
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pascalwager
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Re: Ex DFA CIO launches competitor which will also have ETFs

Post by pascalwager »

nedsaid wrote: Sun Sep 06, 2020 10:15 pm
pascalwager wrote: Sun Sep 06, 2020 4:22 pm
nedsaid wrote: Sat Sep 21, 2019 2:34 pm
cheezit wrote: Sat Sep 21, 2019 2:20 pm
nedsaid wrote: Sun Sep 15, 2019 10:07 am
Advantis US Equity Expense Ratio 0.15%
Advantis International Equity 0.23%
Advantis Emerging Markets Equity 0.33%
Advantis U.S. Small Cap Value 0.25%
Advantis International Small Cap Value 0.36%

If Vanguard's quantitative equity group someday makes ex-US analogs of VFMF and friends I might give them a look, but at these ERs I'm sticking with VSS + VXUS for international exposure in the meantime. Investors in domestic equities can get good exposure to a bunch of factors so cheaply by comparison.
I would say that Avantis is competitive with DFA in terms of fees. Remember you also have to look at how efficiently the different products load on factors. Vanguard is cheap but may not give you as good of factor exposure as DFA-like products. Anyways, this gets to be a pretty sophisticated argument pretty quickly. For a layman like me, not easy to tell what is better. If I want Small/Value tilting, I can want product a lot.s with better Value characteristics and smaller market caps. Vanguard Small Cap Value Index has a lot of mid-caps and a lot of stocks outside the Value styleboxes but it is cheap and its performance has been very good. Certainly trade-offs are involved here.

Avantis will be yet another competitor in the factors universe. Hard to say what will do best going forwards.
I recall Gus Sauter saying in an interview that the Vanguard small value index fund was purposely managed to imitate common active SV management policies. Also, I owned a DFA value fund that targeted deciles 6 through 10, including a lot of mid-cap.

What is the actual, formal relationship between Avantis and AC? (I hold AVDV.) Is Avantis a "division" of AC?
Avantis is a subsidiary of American Century Investments, it has available to it resources of the mother company but it operates independently. American Century is headquartered in Kansas City, Missouri and has a big presence in Mountain View, California which was the headquarters of Benham Mutual funds, which merged with Twentieth Century Investors to become American Century back in 1996. American Century also has offices in New York City. Avantis is located in Los Angeles, California.

Avantis has its own team of managers and analysts. I suppose they get IT and other support from the mother company.
Thanks a lot.

I used to live "down the road" from the Benham Funds, Mountain View office, owned three of their CA muni funds, and had my Roth at AC. Later moved it all to Vanguard, but enjoyed the excellent AC customer service.
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Re: Ex DFA CIO launches competitor which will also have ETFs

Post by Northern Flicker »

Benham was primarily a fixed-income shop and 20th Century was primarily an equity shop, so the merger was a natural fit.
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kolder
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Re: Ex DFA CIO launches competitor which will also have ETFs

Post by kolder »

Hi all.

I'm interested in including the Avantis fund lineup in the 401k fund choices for the company I work for. Originally I was just going to include the ETFs but after reading through the prospectus for the mutual funds it seems that they might be able to be included in some 401k plans without the need for an advisor (not 100% sure on this). Assuming I can get the mutual funds included, I'm a bit concerned to see that the difference in holdings between the MF and ETF versions are quite different. I'm aware that each version tries to achieve the same goal, but does anyone have any insight as to which is preferable? Of course the mutual funds don't suffer from the costs related to ETFs, but are there other benefits/drawbacks to the ETF version considering the strategy implemented by these funds?

As an example AVUV holds 505 funds and AVUVX holds 645, AVUS holds 2003 & AVUSX holds 1811 funds. The performance difference of each fund seems quite significant as well so far. Not much data obviously but here's the factor regression for the US funds https://www.portfoliovisualizer.com/fac ... sion=false. Appreciate any insight.
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Re: Ex DFA CIO launches competitor which will also have ETFs

Post by nzahir »

caklim00 wrote: Fri Apr 03, 2020 10:22 am Moved all of my international small cap into AVDV this morning. Tax loss harvested out of FNDC, VSS, and ISCF and moved my entire ISCF in our IRAs over as well. Just checked and its looks like my international is now roughly

50% All Cap World Index (Large International with a .04% ER in my 401k)
37.5% AVDV
12.5% DFEVX (DFA EM Value)
Why so much small cap international?
Why no total international?
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Re: Ex DFA CIO launches competitor which will also have ETFs

Post by MotoTrojan »

nzahir wrote: Tue Sep 15, 2020 4:30 pm
caklim00 wrote: Fri Apr 03, 2020 10:22 am Moved all of my international small cap into AVDV this morning. Tax loss harvested out of FNDC, VSS, and ISCF and moved my entire ISCF in our IRAs over as well. Just checked and its looks like my international is now roughly

50% All Cap World Index (Large International with a .04% ER in my 401k)
37.5% AVDV
12.5% DFEVX (DFA EM Value)
Why so much small cap international?
Why no total international?
My entire ex-US is in small-value :twisted:. Caklim00 seems to have 50% in total per above.
Last edited by MotoTrojan on Tue Sep 15, 2020 4:39 pm, edited 1 time in total.
caklim00
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Re: Ex DFA CIO launches competitor which will also have ETFs

Post by caklim00 »

nzahir wrote: Tue Sep 15, 2020 4:30 pm
caklim00 wrote: Fri Apr 03, 2020 10:22 am Moved all of my international small cap into AVDV this morning. Tax loss harvested out of FNDC, VSS, and ISCF and moved my entire ISCF in our IRAs over as well. Just checked and its looks like my international is now roughly

50% All Cap World Index (Large International with a .04% ER in my 401k)
37.5% AVDV
12.5% DFEVX (DFA EM Value)
Why so much small cap international?
Why no total international?
50% is total international, see above. 37.5% is small and then the other portion in EM Value. If I could tilt with cheap options more I would.
nzahir
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Re: Ex DFA CIO launches competitor which will also have ETFs

Post by nzahir »

caklim00 wrote: Tue Sep 15, 2020 4:38 pm
nzahir wrote: Tue Sep 15, 2020 4:30 pm
caklim00 wrote: Fri Apr 03, 2020 10:22 am Moved all of my international small cap into AVDV this morning. Tax loss harvested out of FNDC, VSS, and ISCF and moved my entire ISCF in our IRAs over as well. Just checked and its looks like my international is now roughly

50% All Cap World Index (Large International with a .04% ER in my 401k)
37.5% AVDV
12.5% DFEVX (DFA EM Value)
Why so much small cap international?
Why no total international?
50% is total international, see above. 37.5% is small and then the other portion in EM Value. If I could tilt with cheap options more I would.
My bad, I thought I read 50% total US World MKT
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Steve Reading
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Re: Ex DFA CIO launches competitor which will also have ETFs

Post by Steve Reading »

nzahir wrote: Tue Sep 15, 2020 4:41 pm My bad, I thought I read 50% total US World MKT
If US stocks keep rallying and growing this much, who knows, maybe that’ll be a fund one day
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