ETF tracking World Value Small cap stocks?

Hello,

I want to invest in a ETF that is tracking stocks from all around the world that are categorized as small and value.

For American only stocks Vanguard has a fund that suits what I want (VBR) but I want to stocks from the whole world, or better the developed world. Unfortunately I cannot find one.

Googling for small cap value world etf gives me: https://www.ishares.com/ch/individual/en/products/296576/ishares-msci-world-small-cap-ucits-etf-usd-acc-fund?switchLocale=Y

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I would recommend to look at the funds from avantis.

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i haven’t found any world small cap value fund. one might have to combine different funds like
AVDV: DM ex US small cal value from avantis
DGS: WisdomTree Emerging Markets SmallCap Dividend Fund … more like a proxy for small cap value but TER is high (~0.6)

I’m not sure about it, but AVEM does claim to be overweighting SCV and other factors in their prospectus.

Note that AVDV is ex-US, so you’d need to add AVUV as well.

Avantis was founded by ex-dimensional fund advisors employees and is based on their methodology.

the first post already contained mention of VBR so I dint mention US scv… In addition to AVUV, there are VIOV/SLYV as well (based on S&P small cap value indices).

I think AVEM is more “value” than SCV but EM SCV is probably too small to bother.

Thanks for all the replies, I am already holding VT as 90% of my equities so I would like to overweight non-US. Ideally the ETF would be domiciled outside of the US too due to the estate tax.

I looked into the ETFs mentioned here:

AVDV looks very good, and overweights Japan which I want to get in but:

  • It is trading at 0.24% premium.
  • Has a 0.36% TER.
  • Domiciled in the US which has implication for the estate tax.

WSML

  • 0.36% TER and over-weights the US, but
  • EU domiciled
  • US companies tend not to pay dividends as often as non-US companies, which is good tax-wise.

AVEM Is emerging markets only so I am not too excited about it.

AVUV This looks like VBR with a higher TER and probably less liquidity given its managing $0.5B while VBR is managing $28.3B. I do not see why I would buy this one over VBR.

VIOV/SLYV Seem similar to VBR, they might be better choices. I do not know enough to judge.

Based on the above I will probably end up buying either WSML or AVDV. Thanks for suggesting Avantis, I did not know this company existed.

Portfoliovisualizer can help evaluating factor exposure. However most funds are not that old to get a meaningful timeframe.

There are also the new etfs from dimensional that are based on older fonds. DFA Tax-Managed US Targeted Value (Fund: DTMVX, ETF: DFAT has pretty good exposure to SCV. ETFs should launch over the next few weeks.

I confirm this one is the best choice and the only choice for value outside the US.

Then regarding VBR vs SLYV, they are not tracking the same index. VOIV/SLYV is tracking the sp600 which has smaller companies and more value-oriented. A third option would be sp600 Pure Value like RZV.

A good way to compare the fund is by using the stock type map (select weight) from Morningstar:

VBR


image

VIOV


image

RZV:


image

If you feel more adventurous you might also want to check the Smithson fund from Terry Smith (https://www.smithson.co.uk/) with ticker SSON.L. It beats pretty much everything but note that it is not an ETF, it also includes mid cap stocks and has quite some high fees compared to your typical ETF.

Note that RZV has a pretty strong negative exposure to the momentum factor.

While I would not bet on the momentum factor itself, betting against it is quite risky. This is generally a problem with value exposure because you usually buy a stock that has bad recent performance and sell stock that has good recent performance. The SP600 enhanced Value index aims to negate that effect, but there isn’t an etf that tracks that index.

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what would be the implication of “Tax-managed” aspect of this fund on us (swiss domiciled customers)? I tried to read up but didn’t fully get it.

I think they try to lower turnover and minimize capital gains. I don’t think that it changes much for a Swiss investor.

You were looking for a reason why you would go for AVUV instead of VBR. This chart speaks for itself but yeah of course past performance should not be the base for your decisions. Just pointing this out because I am trying to find reasons against AVUV…

VBR:

======================================================
                  CAPM      FF3       FF5       FF6   
------------------------------------------------------
Intercept      -1.8455   -0.1053   -0.2751   -0.5505  
               (1.0519)  (0.5184)  (0.4518)  (0.4289) 
MKT            1.2914*** 0.9525*** 1.0114*** 1.0442***
               (0.1379)  (0.0548)  (0.0568)  (0.0536) 
SMB                      0.6056*** 0.4402**  0.7533** 
                         (0.1602)  (0.1552)  (0.2267) 
HML                      0.4546*** 0.5459*** 0.4626***
                         (0.1363)  (0.1253)  (0.1205) 
RMW                                -0.3311   -0.4041* 
                                   (0.1863)  (0.1696) 
CMA                                -0.3717   -0.2633  
                                   (0.2001)  (0.1872) 
WML                                          0.2115   
                                             (0.1221) 
R-squared      0.8885    0.9910    0.9949    0.9966   
R-squared Adj. 0.8783    0.9880    0.9912    0.9931   
N              13        13        13        13       
======================================================

AVUV:

======================================================
                  CAPM      FF3       FF5       FF6   
------------------------------------------------------
Intercept      -2.1006   -0.3097   0.0406    0.0847   
               (1.3326)  (0.8420)  (0.5415)  (0.6279) 
MKT            1.5707*** 1.1529*** 1.0055*** 1.0003***
               (0.1748)  (0.0890)  (0.0681)  (0.0784) 
SMB                      0.8849*** 1.1101*** 1.0600** 
                         (0.2602)  (0.1860)  (0.3318) 
HML                      0.4349*   0.3883**  0.4017*  
                         (0.2213)  (0.1502)  (0.1765) 
RMW                                0.8661*** 0.8778** 
                                   (0.2233)  (0.2482) 
CMA                                0.0888    0.0715   
                                   (0.2398)  (0.2740) 
WML                                          -0.0338  
                                             (0.1787) 
R-squared      0.8801    0.9841    0.9950    0.9951   
R-squared Adj. 0.8692    0.9788    0.9915    0.9902   
N              13        13        13        13       
======================================================

SMB is small minus big, HML is high minus low(value), RMW is robust minus weak(profitability) CMA is conservative minus aggressive(investment) and WML is winners minus losers(Momentum).

The history isn’t long but here you can already see that AVUV has higher exposure to the profitability factor as well as no negative exposure to the investment factor.

AVUV also has lower turnover.

Thank you @xorfish for comparing all the factors of both ETFs. It’s quite clear who the winner here is although as others have been also saying there is not much historical data yet on AVUV as it’s pretty new compared to VBR.

I didn’t even bother to check that point yet as I was expecting it to be anyway higher for AVUV as it is supposed to be actively managed, very surprising in good…

From here:

AUM for AVUV is now $629M

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@xorfish

Hello I found this document:

https://www.prospectusdocs.com/eol/request?PAGE=DISPLAYPAGE&cid=963917&s=025072802&prid=000821006236

Apparently there is a mutual fund version of the AVDV with the “G Class” that is available for retail investors. That MF has an expense ratio of 0% instead of 0,36%. Is there a reason for us not to buy that version ?

Though I could not find anything with the ticker AVANX in IB. The prospectus does say in the end

G Class shares are available for purchase only by funds advised by American Century Investments and other American Century advisory clients that are subject to a contractual fee for investment management services,

which means we probably do not have access ?

What in the f happened after market? :sweat_smile:

Edit: OK literally one trade executed at that price (who does that?), I guess things will get back to normal on Monday. :slight_smile:

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