Does the Avantis Small Cap Value ETF (AVUV) Belong in Your Portfolio?

Рет қаралды 25,267

Күн бұрын

Today we look at the Avantis Small Cap Value ETF, ticker AVUV. This is a low cost actively managed ETF. Its benchmark is the Russell 2000 Value index. Avantis then focuses on companies it believes offer the best chances of outperforming. The result is a fund that tilts more to small cap and value than a lot of funds that simply track an index.
The big question is whether AVUV deserves a place in our portfolios.
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While still working as a trial attorney in the securities field, I started writing about personal finance and investing In 2007. In 2013 I started the Doughroller Money Podcast, which has been downloaded millions of times. Today I'm the Deputy Editor of Forbes Advisor, managing a growing team of editors and writers that produce content to help readers make the most of their money.
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Пікірлер: 75

@jasonhobbs2405 2 жыл бұрын

I have studied avantis extensively. Calling what they do active management is a misrepresentation, missing what makes them likely to outperform over time. I avoid active management like the plague… 35% of my portfolio is with Avantis.

@alankoslowski9473 Жыл бұрын

Yes, there are degrees of active management. While it's technically actively managed, it's a low turnover/cost approach similar to index investing.

@health_and_finance Жыл бұрын

It's as much actively managed as S&P600 value index

@alankoslowski9473 Жыл бұрын

@@health_and_finance Not really. S&P holdings are determined by committee. Avantis holdings are determined by financial screenings.

@matthiaslipinski2826 3 ай бұрын

Thank you, I was about to post the same. I learned a lot from Rob but this one is a little disappointing.

@justinm7621 2 жыл бұрын

Love the short and sweet videos! Keep these coming please

@letsbuildasnowman7058 2 жыл бұрын

Perfect timing with this video, thanks.

@pomme4moi 2 жыл бұрын

Yes, the value screen that AVUV applies likely selects more value-y stocks than does the Russell 2000 Value Index. Plus, AVUV also applies a profitability screen to weed out some of the deadwood. Time will tell if this factor-based approach outperforms.

@ShOwStOpp3rr 2 жыл бұрын

great video! i was just looking to try and find a decent quality small cap value ETF that i'll have no trouble holding long term to compliment my portfolio this sounds right up my alley

@luisoncpp 2 жыл бұрын

About the lack of history of Avantis: the people of Avantis used to work at Dimensional Fund Advisors and follow a similar methodology, you can use the past performance of their mutual funds as a proxy to get an idea about Avantis. Keep in mind that Dimensional and Avantis are closer to smart betas index funds rather than a typical managed fund. So a big factor to consider are the factors(sorry for the pun), portfolio visualizer has a factor regression tool. Overall Avantis funds are pretty good in factors.

@donaldwebster2866 Жыл бұрын

While AVUV deviates from an index, I still think of it as passively managed because they select their stock with an algorithm. In effect, they are creating their own index and sticking to that.

@liarzdice 6 ай бұрын

Yep it's rules based "active" investing.

@rightangletriangle3188 3 ай бұрын

Thanks for the analysis and really like the explanation in AVUV vs. VBR.

@nerdlife206 Жыл бұрын

😮 Oh my gosh, thank you for this video. I was very heavy into VBR, when apparently AVUV is tracking that much better

@floridaboy7273 11 ай бұрын

way better

@SlowBrewFinance 2 жыл бұрын

I'm not too sure attributing interest rates paints a valid picture for outperformance. Most of the return came from November 2020 to February 2021, at which point interest rates had been left untouched. The outperformance can be attributed, more broadly and accurately, to heavier factor loadings. Just because it is actively managed, it doesn't mean that they are making purely active choices about the "qualitative" components of companies. Rules-based active management can be a step above from indexing since indexing is also "rules-based". I think taking an index and tilting further into factors we know explain outperformance, is overall a better set up over the long term.

@luisoncpp 2 жыл бұрын

I have heard that if you want to brag about your actively managed mutual fund performance, you should use Russell 2000 as the benchmark. With that in mind, I would prefer to choose another benchmark for AVUV, like VIOV (S&P 600 small cap value)

@btw-3006 2 ай бұрын

Fair point, but AVUV has beaten VIOV since the inception of AVUV.

@tchuloguzman432 2 жыл бұрын

Avantis and dimensional ETFs are worth looking for ,avuv and dfsv as small caps example

@fatnails 2 жыл бұрын

Thanks so much for this close look at AVUV. I had come to the same conclusion as you regarding the comparison between AVUV and VBR and a few other “small cap value” funds - AVUV is the smallest and value-est! However, to my frustration, the fund cannot be purchased in my Merrill Edge account, I believe because of the short track record. I’d love some information about how brokers decide which funds they allow (or disallow) in their accounts. Cheers!

@kylel8954 2 жыл бұрын

Since you can’t buy AVUV, see if your broker has VIOV.

@Andformerthingshavepassedaway Жыл бұрын

On a Rob Burger binge today, even having a cheeseburger for dinner, no pub intended😉

@Compounddeznuts 2 жыл бұрын

Viov a pretty good SV etf, very much only small & Marco cap stocks

@larryhartman499 2 жыл бұрын

love your short videos please adjust your volume to be as loud as the ads on you tube

@sleepyhead7391 2 жыл бұрын

Hi Rob, what are your thoughts on VT, vanguard Total World stock index? Is there any advantage over the traditional two or three fund portfolio?

@michaelfriedman2221 2 жыл бұрын

AVUV is overweighted in energy and has been tracking more towards the ebb and flow of energy stocks lately

@geronimorex3608 2 жыл бұрын

Spot on

@sdavids13 2 жыл бұрын

This...

@br1pres8 Жыл бұрын

Update from Jan/2023: AVUV still crushing both VTWV and VBR... --- CAGR: AVUV=14,76% ; VTWV=6,79% ; VBR=8,84%.

@NATOnova Жыл бұрын

Can you please compare DFSV vs AVUV?

@captainnitrousx1331 Жыл бұрын

I noticed the turnover. How is it in a taxable portfolio as far as tax efficiency goes?

@jimd.2683 2 жыл бұрын

Any opinion on NVG? Thanks

@kylel8954 2 жыл бұрын

Why do you think they chose the Russell 2000 instead of the S&P 600? Maybe I’m wrong, but I thought the S&P 600 has out performed the Russell 2000.

@disch972 2 жыл бұрын

Hi Rob, love your videos! Have you done a video concerning JEPI or Similar ETF! If not, I would like to hear your take since this is a similar strategy used by professional traders. Thanks! Allen D.

@tuonghoang2841 2 жыл бұрын

Do you study VFVA? It is vanguard active value and it's large, mid and small cap

@robbert7599 8 ай бұрын

can you please do an update? ive been hearing from some very knowledgeable investors that financials will be, and have been, encountering major headwinds for the forseeable future. as you know, financials are a large part of AVUV's holdings, so i'd really like to know your thoughts on this given where we are in early November 2023

@daymouslow1513 2 жыл бұрын

How does SLYV compares with AVUV?

@kimappreciateslife Жыл бұрын

@RobBerger, did you decide to switch to AVUV? I know your were in VBR, yes? Merriman is really good at talking his book re: SCV. I watched a few of his videos. Mostly the same presentation where he talks fast, loud & bullish on this topic.

@aaront936 2 жыл бұрын

Can you do a review of NSPY its a nightshares 500 etf.

@Sindibad007 Жыл бұрын

I like your shirt!

@jnlin8569 Жыл бұрын

@robberger, in what order would you put AVUV in these accounts: taxable, HSA, Roth IRA, traditional IRA? And why? thanks!

@jt1819 Жыл бұрын

add it to your roth or hsa as it will potentially have a bigger return than VT or VOO since it is 'riskier'.

@Ehhhh123 3 ай бұрын

How does the increased popularity of passive investing into index funds by and the increased number of investors who soley invest into the s&p 500 or tech funds affect the small cap value premium going into the future? Can small cap value appreciate if investors are mainly taught these days to just blindly keep investing into the s&p 500 and tech (qqq)? Where will capital inflows come in to increase scv value if all the money will consistently keep pouring into s&p 500/ tech by the new generation of passive investors?

@dmsoundcollective6746 2 жыл бұрын

Thank you for going back over this Rob. The slightly higher fees and the fact that it's a managed fund just is not something I want in my portfolio. If it had 15 years of solid performance then I might switch over to it.

@alextjb 2 жыл бұрын

Avantis are former dimensional employees and they have a mutual fund that you could take a look at going back to the 90s. Using back testing the factor approach for small cap value outperforms almost everything. But you have to be willing to stick with it through thick and thin and over very long periods of time because of the potential for increased volatility.

@dmsoundcollective6746 2 жыл бұрын

I'm not putting down Avantis. I left betterment after doing the calculations and seeing how much the .25 fees but affect me over time and I came to the conclusion that I think like John bogal, the fees are where I am going to squeeze out that little extra money or big extra money that I'm going to have in retirement. ;) I'm done with finding the next best thing.

@alextjb 2 жыл бұрын

@@dmsoundcollective6746 fair enough. That way works perfectly well also. :) Although I wouldn’t call this the next best thing… like I said, the concept has been around since the 90s. Where it also has some benefits is with international small cap value and international emerging value. I know less about those and it helps weed out some of the dead weight in a full index etf option. Although, to your point… the international ones are higher ER. I don’t have a giant allocation to it. My core is still VOO. 7.5% in AVUV and 5% in AVDV. Edit: one other benefit is that it weeds out things like GameStop from a broad index which I like. Solid companies and profitable companies will be very helpful for the next few years to survive.

@costanzojr 2 жыл бұрын

@@alextjb The fact is that an allocation below 20% does not have a significant impact even in the long term.

@alextjb 2 жыл бұрын

@@costanzojr it’s a tilt, combined with the rest of my US and international positions it makes up my portfolio. So yes, all together it is nicely optimized for what I want it to do.

@Tyrell-Jemmott 2 жыл бұрын

What fund is a good replacement for Vanguard Total international stock market? in the UK we Can't buy that fund as it's unavailable to us. Any help would be appreciated.

@bkozulla5841 4 ай бұрын

Avde

@NetGhost420 2 жыл бұрын

VTWO 👍

@XwytreX Жыл бұрын

I have the VOO currently, do you think it’s better to get AVUV or get VBR if I want to maximise returns? I personally think AVUV can have better performance but has its drawbacks like volatility and lack of track record. Maybe a young investor in their 20s like me can stomach the volatility

@asdfTheGreat 2 ай бұрын

You mean instead of VOO? Hell to the no dude. But like 80/20, sure.

@costanzojr 2 жыл бұрын

I 'd be interested to hear what other people think. There is a lot of attention around Dimensional funds lately. However, VIOV has actually outperformed DFSVX over the last decade. How could that be explained?

@ericnelson7613 Жыл бұрын

DFA funds target smaller stocks and lower-priced value stocks than traditional index funds (just like an all-stock fund has more equity exposure than a 60/40 balanced fund), so when value & small cap stocks underperform-as they have for the last 10 years-then the fund with deeper size/value exposure will temporarily underperform. Over time, value & small stocks have outperformed growth & large stocks over 75% of 5-year periods and 90% of 10-year periods, so it’s a safe bet that DFA will do better over time.

@costanzojr Жыл бұрын

@@ericnelson7613 Fair enough. At the same time, DFA and Avantis have ended up with very different portfolios while, in principle, applying the same approach from the Fama-French research. Eg they have quite different median cap and quite different P/B ratios. I guess we could expect the one that goes deeper into SCV to be able to provide the highest expected return. Yet, we are in a section of the market that has less liquidity, so I struggle to see how the fund that offers best exposure to SCV today can guarantee to continue doing so in the future. And as new SCV-focussed funds will be created, how is one supposed to know in advance which one will do best?

@ericnelson7613 Жыл бұрын

@@costanzojr DFA & Avantis have different weighting schemes so they’re going to own different stocks. You don’t have to always be in the fund with the absolute smallest/cheapest stocks, but smaller/cheaper (in the case of DFA vs Vanguard or S&P) is a clear advantage, as is daily management/rebalancing vs periodic index reconstitution (index funds). DFA does the best of combining broad diversification (DFSVX has 1,000+ stocks) along with targeted size & value exposure while screening out low profitability stocks.

@Kenster-man Жыл бұрын

@@ericnelson7613 - I’m not 100% sure - but it also seems like DFA weighs the smallcap factor a bit more than Avantis whereas Avantis seems to weigh Profitability factor a bit more than DFA does. No hard facts on my part just cursory observation and I could be wrong.

@kokalti 2 жыл бұрын

3:20 can’t the same thing be said about VTI and VOO? Since now everybody thinks investing in those etf’s are the best thing since sliced bread, wouldn’t that hurt their future performance?

@SlowBrewFinance 2 жыл бұрын

This cannot be emphasized enough. VTI and VOO are full of growth companies that have lower expected returns due to inflated prices. Especially considering we have a huge value spread between expensive companies and value companies - It is far from that. Value, by definition, are companies have less interest in them. Comparing ARKK and AVUV misses the whole point in valuation theory.

@JosephDickson 2 жыл бұрын

Two years, try twenty. 😉 Does portfolio visualizer take fees into account on the graph?

@jozkomrkvicka7607 11 ай бұрын

2 years is reallly nothing. Even 20 don't say much.

@handymandad5613 2 жыл бұрын

I’ve heard that the out performance of AVUV as compared to other small cap value funds can be attributed to its exposure to energy. If you remove that, the fund does not outperform and performance will suffer once energy falls.

@alankoslowski9473 Жыл бұрын

Even if that's true, the holdings are continuously monitored so if/when energy companies' value characteristics decrease their allocation will be reduced.