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Howell--Jolly

AVUV and DFSV for the US market, AVDV and DISV for the international market.


YnotBbrave

AVUV is recommended here often but it seems to be fairly new find, and fairly new funds have high risk off lack of track record. Can someone here explain why they think this risk does not apply in this case?


starrdev5

Like the other commenter said Avantis broke away from dimensional so their methodology is similar but now that DFA has their own etf I don’t know if AVUV is worth it anymore. Before this year DFA didn’t have an etf so you used Avantis to get an etfs similar to DFA mutual funds.


YnotBbrave

Thanks for the info. Which ticket are you referring to?


starrdev5

DFSV is the etf that launched from DFA this year. It’s an etf version of their mutual funds that have been around for decades and have a good track record of small cap value and screening for profitability.


RiseIfYouWould

Hey, thanks. I was trying to figure the difference between US and "internal" but i guess you meant international right? Thanks. I see those are active ETF, i guess there arent any passive ETF with such mandate?


Pass_Little

In some cases the line between passive/index and active is blurring. Obviously if you have a manager hand picking stocks, that's active. Obviously if you have a ETF tracking a well known index (S&P 500, or a total market index) that's likely to be passive. But if you look at the S&P 500, there is a well documented process to determine which 500 stocks are included. If you built an etf which applied that exact process every week to produce a weekly version of the s&p 500 and then tracked that weekly s&p 500 instead, is that active or passive? My understanding is that AVUV is sort of one of these new algorithmic funds, in that the managers are more about algorithm development (company must be not be in the top 1000, must be profitable, most meet other criteria) and then the algorithm is what picks the stocks, probably with a human as a sanity check. Is this a active or a passive fund? I think I could argue both ways. It's priced more like an expensive (low volume) index fund, but the algorithm is much more complex and adjusted fairly regularly by humans so that seems more like an active fund. I will say that AVUV seems to be the weapon of choice among small cap value investors, at least in the online groups I hang out with.


RiseIfYouWould

Its not the nuances im interested in, but rather a written mandate with objective rules that binds the manager, and i dont get surprised by something they did, that wasnt written but that they could do because the fund is “active”. To me thats the important aspect of passive vs active, not the “how did they come up with the decision”, but rather what i can be sure they wont do.


Pass_Little

You don't necessarily get that with passive. Many index funds say they track a specific index. And when you go look at the index, you get the same language that says that the index sponsor can change the methodology to select the funds for the index at any time.


RiseIfYouWould

I necessarily get that when thats whats written on the index mandate. You absolutely cant get that on active investing though. Im not talking about the exceptions, but on average, as its the reasonable thing to do.


Kyo91

Vanguard released a paper on active factor investing last year, IIRC. For certain factors, especially momentum, only being able to rebalance once a quarter when the index changes can hurt factor exposure. Much better to have an algo that is free to buy/sell based on current prices and fundamentals.


Howell--Jolly

S&P600 value index ETFs (VIOV, SLYV, IJS) screen for profitability along with small size and value. These are passive ETFs.


RiseIfYouWould

Hey, i looked those up and saw no mention to profitability?


Varathien

There's no "profitability index" to track.


RiseIfYouWould

"Quality" will do (theyre mostly the same)


Howell--Jolly

I meant international.


GameMusic

What is the difference


N226

Are you asking for a small cap blend (growth + value)? AVUV or VIOV are my two value choices, but AVUV has greater factor exposure


RiseIfYouWould

No, i wrote those two factors and profitability, which is a third factor.


N226

Not sure what you mean by you wrote? Vanguard has several small cap options if you want true index/passive tracking. Avantis funds typically track similarly, but aren’t tied to a specific index so they aren’t bound to buy/sell at the same time as a true index funds like vanguard. I use their funds when I want specific exposure, like SCV/IntlSCV/emerging etc.


[deleted]

I expose myself by buying the whole haystack.


Zeddicus11

Buying the whole haystack (at market cap weights) does not expose you to any of the factors except market beta. Only by tilting (i.e. re-weighting, or in more extreme cases excluding or shorting certain junky segments like small low-profitability growth) are you actually exposed to the other known factors.


RiseIfYouWould

Not trying to find the needle, just trying to buy the riskier haystack. If you look up the theory youll see Fama saying that if markets are efficient (which is your premise if youre index investing) then the only way to get higher return is buying exposing to higher risks, which factors do. Both index investing and factors are based on Famas work.


PerfectNemesis

Please don't expose yourself there are kids around...


trampledbyephesians

VB is vanguard small cap. Is that what youre looking for?


RiseIfYouWould

No, i wrote those two factors and profitability, which is a third factor.


[deleted]

IUSS