Complementary small caps etf for VWRL?

Investing / Portfolios
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To necro this post: I was also interested if there was a small cap fund to complement not just VWRL but FTSE All-World in general.

FTSE indices already include some small cap compared to MSCI, as they cover 90% of investable market compared to 85%. Hence when using an MSCI small cap fund together with the FTSE All-World, there’s some overlap.

Vanguard US has an FTSE All-World ex US Small Cap (VSS), but I couldn’t find one for the US tracking the same index.

Any reason there are multiple ones for MSCI, but none for FTSE?

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Well, there are tons of US ETFs on US small caps, although small caps value is more popular in this space.

Oh, I see what you mean. Well, the reason is that hardly anyone but Vanguard uses FTSE indices, and for US stocks, US Vanguard uses other indices (CRISP or something).

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When I moved from VT to UCITS, I added IUSN (MSCI World SC) to FTSE all world. Just looked at FTSE factsheet capitalization data and used FTSE Developed SC, which is currently 8,3% of the portfolio. It is not a clean solution, there is a 16% overlap in MCW between FTSD Developed World and MSCI World SC, but it is slightly better than not adding.

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Any reason you went for FTSE All-World instead of MSCI ACWI IMI if you wanted to include small caps?

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I like Vanguard. I use VHVE (FTSE developed, 82% +VFEA FTSE Emerging, 9%). These are cheaper than all-in-one ETF, and seem to avoid sampling (not that important, but I don’t like it, and dont understand it in a sense why fund managers need it for most liquid large stocks).

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Been buying CHDVD, now considering adding some SMIM to it to move away from concentration to build up my CH and CHF bias - seeing them as a cross between a bond and emergency fund (yes, my mental gymnastics are Olympic level), and came across the SPI Extra. Not in mind to have a convo on home biases and small cap tilts, the question is simple: is there an ETF (not pension provider mutual fund) that tracks that index? I guess it should be a simple question to answer but I didn’t manage to, maybe I fail at googling?

Edit, for clarity: I am aware that the most inclusive way to do CH and CHF bias would be getting CHSPI, or if I want to regulate cap weight would be to get SLICHA+SMIM, hence I was looking for a small cap addition if I were to go down that route.

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Probably not ETF (too niche, or not efficient due to withholding?), but some mutual funds, e.g. CH0315622966 (you need to search for Small & Mid cap).

(there’s a bunch more funds, but with much higher TER, swisscanto looked reasonable)

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These mutual funds normally have multiple classes, including those for retail investors (= can be bought in taxable).

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Indexing do not makes sense for small caps as you retrieve most of the failed companies from major large cap etf that get excluded.
If you want to avoid the falling stars and pick the raising stars That’s where it makes sense to pick stock yourself or select active fund with long lasting past performance.
You will get charge heavily but you will diversify your risk. In france and Europe, I like the active funds of Indépendance and Expension with William Higgons.

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That’s a fair point

Conceptually, I struggle to get my head around small cap value funds, the simplistic thinking being “the moment they do well they will stop being either small cap or value, hence get filtered out, isn’t this cutting the flowers?”.

Don’t know if I have a better mental reasoning for mid cap (or anything else), possibly that they are companies who churn, are profitable and don’t want to be something else, and their value will rise a tad above inflation, and possibly pay good dividends.

Large cap is the “obvious” - you just pick the past winners.

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Viac offers SPI Extra either from UBS (CH0110869143) or Swisscanto (CH0132501898), I use it myself in 3a.

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Small Cap & Value are the 2 out of the 3-factor model by Fama & French (the 3d is the market).
Without going into details, it has been proved (or “proved”) empirically and theoretically that Small cap/Value over-perform the market in the long run.
The idea is that you are being exposed to different type(s) of risk and you are compensated for that or that they are simply mispriced.

“Cutting the flowers” is more against Momentum, not against small cap and/or value category.
If a small company is no longer small and leaves the small cap index, it doesn’t mean that others will not join the index from the bottom or the top with the same characteristics.

I wouldn’t also go with a traditional active fund as proposed above for the simple reason that statistically they underperform in the long run.

PS If the factors are still present, or if you can wait 10–15 years for them to materialize and achieve the over‑performance, there are several different topics to consider. :slightly_smiling_face:

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And to contribute to the Complementary small caps etf for VWRL?, Avantis now offers the UCITS version of Small Cap / Value ETF AVWS

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I believe in passive investing and diversification, so I would argue for (and own) a regular small cap index.

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They even offer it on SIX: https://www.avantisinvestors.com/ucitsetf/ad-hoc-announcements/swiss-six-listing-announcement/

The only issue is that (for now at least) it seems these funds are not yet in ICTax - so may be more headache than it’s worth it until they’re added.

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