BRK’s PE is meaningless because under accounting rules they have to account for movements in their unrealised gains and losses in its investment portfolio - obviously this injects so much volatility that the earnings figure is now useless.
You now need to separate out the operating income from their businesses from their investments to get a useful picture.
What about these?
See post #29 here by San_Francisco, apparently these cover the quality factor and not actual the MSCI Quality Index
Ah, so these two ETFs implement Quality factors, but keep the weights of industries (compared to the standard MSCI World) intact, hence “Sector Neutral”.
Perhaps there’s a reason there are no non-neutral Quality ETFs?
If I understand correctly then AVGV is not replicating the MSCI World Quality index but is an ETF designed by Avantis by picking value stocks?
@San_Francisco have you checked this one out?
Sorry yes I meant the Avantis funds are capturing value and not quality. Two different approaches both of them potentially outperforming VT. For me the quality index is slightly preferred over the active value approach by Avantis, hence I am looking for such an ETF.
The msci quality index is basically in the same way active as Avantis or DFA‘s rules based approaches.
The only really passive approaches are market cap weighted total stockmarket indices.
Difference is: iShares follow an independent index, provided by a third-party company, MSCI. Their index is systematic & replicable.
Avantis & DFA have their own private systems which they can change at will. Basically discretionary black boxes. They can change their definitions of “value” whenever they like. iShares cannot change the MSCI Index.
So yes, Avantis & DFA are more active than iShares MSCI ETFs
I don’t get your point. I think it’s highly unlikely a fund literally having “MSCI” in its name would all of a sudden stop using the MSCI index.
My point is: DFA & Avantis aren’t following a replicable, independent index. So they haven’t got anything to drop in the first place.
Not sure the “index” label (or any of its creators’ labels) can guarantee there is a 100% non-active approach involved.
Say SP600 (SCV variant of the famous SP500) - afaik a board decides what gets in and out.
Yes there might be some thresholded metrics and certain principles involved to pre-feed them, but there is certainly a human active decision too.
Yes, for the S&P that holds true, and for that very reason I wouldn’t call it a 100% systematic index. MSCI, on the other hand, is purely systematic afaik.
My point is: DFA & Avantis have no rules to follow but their own. Blackrock/iShares MSCI ETFs have to follow the MSCI index, which they cannot change.
@Compounding a few questions to ponder
DFA / Avantis are systematic active with their own definition and rules of quality / profitability that they try to target by including strategies coming out of the research they fund, some of which is likely published. They are not 100% transparent, but that is their business model.
You are looking at MSCI Quality vs DFA/Avantis from the lens of Cap weighted / passive index vs traditional active (one man/woman’s discretion). That is a wrong way of looking at it. Both of them are neither truly passive nor traditional active in the
Both MSCI Quality and DFA/Avantis are active. You can choose whose definition and implementation of quality / profitability you like / trust more.
MSCI Quality is a rule-based index that can (and AFAIK is) computed automatically.
The commonly accepted definition does not classify this as active management or investing.
Exactly, and that’s the reason I cannot get behind them. If it’s not publicly available and replicable, it’s discretionary stock-picking. Now if you think DFA/Avantis are smarter than the market, go for it. I believe in the long run, I will outperform them all by just holding the market, as it always has been
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Page 6, section ‘index and methodology review process’ of the MSCI index policies document
When I read it, it doesn’t come across as non-active.
It would be interesting to know your definition long-term, and in which time frame the Market has “always” outperformed MSCI Quality?
EDIT: or did I misinterpret and you’re saying Avantis?
The equity risk premium has been observed for more than 100 years. Factors may come and go (quality, value, profitability, investment etc.). Who knows what the new hot sh*t in the factor industry will be in 10 years? Hyperboly factor? Divinity factor? Get-rich-faster-factor 
? This stuff’s always going to get arbed away, and all you end up having is a concentrated stock ETF at a higher price than a total market ETF.
If you own the total market, you don’t care. One ring to rule all them factors: VT.
To put it differently, all the hype about value, quality etc. is nothing but recency bias & performance chasing to me.
Then some say: Even if a factor premium disappears, you will get diversification from factor tilting. But what you actually get is concentration risk from reducing the total market to some factor stocks, or from overweighting factor stocks. And we all know how great active management has done at overweighting “superior” stock picks…
Trying to outsmart the market has been a loosers game for 90% of managers in the short run, and for 100% in the long run
And this will be my final statement on active / factor investing
There is not a single reference to any data in your reply and you summed it up by stating “to me” - i.e. your unfounded opinion. You might be happy with VT, that is fine. Investing in just the Market is suited to the majority of investors. And actively managed funds do historically not outperform the Market.
However various Factors have consistently outperformed the Market. They haven’t been “arbed away”.
If you take the time to read my earlier posts in this topic, you can refer to the actual data I provided from as early as 1978 on the annualised returns of some factors over various rolling periods. It isn’t “recency bias” - although you can argue that about Momentum factor, which isn’t one we discuss.
Your arguments are quite weak and you don’t substantiate them.