nzahir wrote: ↑Thu Sep 17, 2020 6:22 pm
So from doing some light studying about SCV I have some questions and conclusions:
1. It seems like S&P600>Russell 2000 b/c of the extra screening process, right?
2. VBR/VSIAX have a lot of mid cap, about half, way too much for the purpose of scv.
I have a few questions though.
1. What are the difference between IJS/VIOV/SLYV (very similar results) and VIOO/SPSM (very similar results, SPSM .05% ER)?
2. Do you guys use one of the cheaper funds because of ER, such as SPSM, or do you focus on trying to use Vanguard/iShares or largest mkt cap
3. I have also been looking into AVUV, but I can not tell if it is worth using over the others. Is their screening process really much better than the S&P600 and is it worth paying a higher fee (.25% is not awful though)?
If anyone can help/give useful info, would be greatly appreciated
Russell 2000 is a bit junkier because it doesn't have the earnings screen of the S&P600, yes. I do prefer S&P600 funds over R2K.
VIOO and SPSM are not value funds, they are S&P600 blend funds which is why they are cheaper (but they will have far less value factor exposure, and thus lower expected return); just because returns have been similar for a recent period doesn't mean they are the same. If you want value, you want IJS/VIOV/SLYV which are all near-identical. I would go with VIOV or SLYV personally because of the lower expense ratio.
VBR/VSIAX has a lot of mid-caps which reduces it's SMB (small factor) but it has had pretty similar HML (value factor) exposure to SLYV/VIOV/IJS over it's history, so it is still a perfectly acceptable fund to capture SCV. I used to preach pretty hard about just the point you bring up, but have since opened my eyes to the real impact of it's softer tilt via it's mid-cap exposure (just need to hold a little more of it).
AVUV has some great features that should improve profitability exposure and reduce negative momentum while tilting a bit more than VBR/SLYV/etc... whether it is worth it to you depends on your desired factor exposure. Let's presume it is equivalent to DFSVX which is DFA's longterm SCV fund.
I've tried to make this point a few times to you, but you can get the same exposure with different amounts of these. For example:
If you are okay with 75% VFINX and 25% VBR, you could get the same exposure with these options:
80/20 VFINX/SLYV:
https://www.portfoliovisualizer.com/mat ... tion2_1=75
82/18 VFINX/DFSVX (which is probably similar to VFINX/AVUV):
https://www.portfoliovisualizer.com/mat ... tion2_1=75
Showing you all three of these together, can you really tell the difference? The only one that really stands out to me is the one with DFSVX which underperformed, likely because DFSVX has such a high expense ratio that even at only 18% it drags things down:
https://www.portfoliovisualizer.com/bac ... tion4_3=18
Point is the decision on which fund is less critical than you are making it out to be, the real question is how much do you want to tilt? Once you decide that, using VBR, SLYV, VIOV, or AVUV really won't matter much, you just may want to adjust how much of each you hold to get you that tilt.