Altruist Financial Advisors LLC
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Domestic Large-Cap Value Funds

 

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There is good reason to believe that large value stocks will, in the long run and on average, tend to have higher risk-adjusted returns than large growth stocks.  There are several similar-seeming investment options available.  Which is best?

The funds are listed in rough order of our overall preference.

Preferences are listed separately for use in retirement accounts and for taxable accounts.

For a listing of our preferences in other asset classes, see here.

Retirement Accounts (i.e., tax-deferred or tax-exempt accounts)

bulletGuggenheim S&P 500 Pure Value ETF (RPV).  E/R: 0.35%.  This ETF tracks the S&P 500/Citigroup Pure Value Index.  It is extremely valuey (as measured by weighted average book to market value).  Unlike virtually all other passively managed funds, this fund isn't weighted by market cap, but rather by "value-ness."  This fund is rated above DFLVX because it is slightly more valuey, despite being somewhat more expensive, and because it is available to the general public.  RPV's measure of "value-ness" is not limited to book-to-market ratio.  For more information on ETFs, see here.  Our preference for RPV over DFLVX is small.

bulletDFA US Large Value Portfolio (DFLVX).  E/R: 0.27%.  This fund is extremely valuey (as measured by weighted average book to market value).  It basically has a strategy of emulating the returns of the 10% most valuey of the 90% of US publicly traded companies with the highest market capitalization.

bulletPowerShares Russell Top 200 Pure Value Portfolio (PXLV).  E/R: 0.39%.  This fund attempts to track the Russell Top 200 Pure Value Index.  For more information on ETFs, see here.

bulletVanguard Value Index Fund Admiral Shares (VVIAX).  E/R: 0.08%.  Minimum initial investment = $10,000.  This fund tracks the CRSP US Large Cap Value Index.  While its expense ratio is lower than DFLVX, the stocks it invests in are nowhere near as valuey.  This fund's low expense ratio is what makes it relatively attractive.

bulletVanguard Mega Cap 300 Value ETF (MGV).  E/R: 0.11%.  This ETF is a share class of the Vanguard Mega Cap 300 Value Index Fund Institutional Shares (VMVLX).  It attempts to track the CRSP US Mega Cap Value Index of very large valuey companies.  For more information on ETFs, see here.

bulletVanguard Value ETF (VTV).  E/R: 0.09%.  This ETF is a share class of the Vanguard Value Index Fund (VIVAX).  For more information on ETFs, see here.

bulletSchwab U.S. Large-Cap Value ETF (SCHV).  E/R: 0.06%.  This ETF tracks the Dow Jones U.S. Large-Cap Value Total Stock Market Index.  For more information on ETFs, see here.

bulletiShares Core U.S. Value ETF (IUSV).  E/R: 0.07%.  This ETF tracks the Russell 3000 Value stock index, which tracks US Value Stocks of all market capitalizations.  For more information on ETFs, see here.
 
bulletVanguard Russell 1000 Value ETF (VONV).  E/R: 0.15%.  This ETF is a share class of the Vanguard Russell 1000 Value Index Fund Institutional Shares (VRVIX).  For more information on ETFs, see here.

bulletVanguard S&P 500 Value ETF (VOOV).  E/R: 0.15%.  This ETF is a share class of the Vanguard S&P 500 Value Index Fund Institutional Shares (VSPVX).  For more information on ETFs, see here.

bulletiShares MSCI USA Value Factor ETF (VLUE).  E/R: 0.15%.  This ETF tracks the MSCI US Value Factor Index of large valuey US stocks.  For more information on ETFs, see here.
 
bulletVanguard Value Index Fund (VIVAX).  E/R: 0.24%.  This fund tracks the CRSP US Large Cap Value Index.

bulletiShares S&P 500 Value Fund (IVE).  E/R: 0.18%.  This ETF tracks the S&P 500 Value index.  For more information on ETFs, see here.

bulletSPDR S&P 500 Value Fund (SPYV).  E/R: 0.20%.  This ETF tracks the S&P 500 Value index.  For more information on ETFs, see here.

bulletiShares Russell Top 200 Value Fund (IWX).  E/R: 0.20%.  This ETF tracks the Russell Top 200 Value index.  For more information on ETFs, see here.

bulletiShares Russell 1000 Value Index Fund (IWD).  E/R: 0.25%.  This ETF tracks the Russell 1000 Value index.  For more information on ETFs, see here.

bulletSSgA streetTRACKS U.S. Large Cap Value Index Fund (ELV).  E/R: 0.21%.  This ETF tracks the Dow Jones Large Cap Value Index.  For more information on ETFs, see here.

bulletiShares Morningstar Large Value Fund (JKF).  E/R: 0.25%.  This ETF tracks stocks which Morningstar considers to be "Large Value."  For more information on ETFs, see here.
 
bulletWisdomTree Low P/E Fund (EZY).  E/R: 0.38%.  This ETF tracks the WisdomTree Low P/E Index of US Large Cap Value stocks (i.e., the 30% of stocks with market capitalizations above $200 million in the WisdomTree Earnings Index with the lowest P/E ratios).  For more information on ETFs, see here.  This fund seems too expensive and not valuey enough, compared with the better choices above
 
bulletWisdomTree Earnings Top 100 Fund (EEZ).  E/R: 0.38%.  This ETF tracks the WisdomTree Earnings Top 100 Index of US Large Cap Value stocks (i.e., the 100 stocks in the WisdomTree Earnings 500 Index with the highest earnings yields).  For more information on ETFs, see here.  This fund seems too expensive and not valuey enough, compared with the better choices above
 
bulletWisdomTree Dividend Top 100 Fund (DTN).  E/R: 0.38%.  This ETF tracks the WisdomTree Dividend Top 100 Index of US Large Cap Value stocks (i.e., those large cap stocks with high dividend yields).  For more information on ETFs, see here.  This fund seems too expensive and not valuey enough, compared with the better choices above.

Taxable Accounts

bulletGuggenheim S&P 500 Pure Value ETF (RPV).  E/R: 0.35%.  This ETF tracks the S&P 500/Citigroup Pure Value Index.  It is extremely valuey (as measured by weighted average book to market value).  Unlike virtually all other passively managed funds, this fund isn't weighted by market cap, but rather by "value-ness."  As an ETF, it is reasonable to expect this fund to be perfectly capital gains tax efficient.  For more information on ETFs, see here.
 
bulletDFA Tax-Managed U.S. Marketwide Value Portfolio (DTMMX).  E/R: 0.37%.  This fund is really an all-market value fund, which makes it less style-pure than we would like.  The fund manages to minimize dividend as well as capital gain distributions.
 
bulletVanguard Value Index Fund Admiral Shares (VVIAX).  E/R: 0.08%.  Minimum initial investment = $10,000.  This fund tracks the CRSP US Large Cap Value Index.  While its expense ratio is lower than DFLVX, the stocks it invests in are nowhere near as valuey.  This fund's low expense ratio is what makes it relatively attractive.

bulletPowerShares Russell Top 200 Pure Value Portfolio (PXLV).  E/R: 0.39%.  This fund attempts to track the Russell Top 200 Pure Value Index.  While extremely value-ey, this fund is somewhat concentrated.  As an ETF, it is reasonable to expect this fund to be perfectly capital gains tax efficient.  For more information on ETFs, see here.

bulletVanguard Mega Cap 300 Value ETF (MGV).  E/R: 0.11%.  This ETF is a share class of the Vanguard Mega Cap 300 Value Index Fund Institutional Shares (VMVLX).  However, unlike other non-Vanguard ETFs, this fund will be only as tax efficient as its underlying fund no more and no less.  It attempts to track the CRSP US Mega Cap Value Index of very large valuey companies.  For more information on ETFs, see here.

bulletVanguard Value ETF (VTV).  E/R: 0.09%.  This ETF is a share class of the Vanguard Value Index Fund (VIVAX).  However, unlike other non-Vanguard ETFs, this fund will be only as tax efficient as its underlying fund no more and no less.  For more information on ETFs, see here.

bulletSchwab U.S. Large-Cap Value ETF (SCHV).  E/R: 0.06%.  This ETF tracks the Dow Jones U.S. Large-Cap Value Total Stock Market Index.  For more information on ETFs, see here.

bulletiShares Core U.S. Value ETF (IUSV).  E/R: 0.07%.  This ETF tracks the Russell 3000 Value stock index, which tracks US Value Stocks of all market capitalizations.  For more information on ETFs, see here.
 
bulletVanguard Russell 1000 Value ETF (VONV).  E/R: 0.15%.  This ETF is a share class of the Vanguard Russell 1000 Value Index Fund Institutional Shares (VRVIX).  However, unlike other non-Vanguard ETFs, this fund will be only as tax efficient as its underlying fund no more and no less.  For more information on ETFs, see here.

bulletVanguard S&P 500 Value ETF (VOOV).  E/R: 0.15%.  This ETF is a share class of the Vanguard S&P 500 Value Index Fund Institutional Shares (VSPVX).  However, unlike other non-Vanguard ETFs, this fund will be only as tax efficient as its underlying fund no more and no less.  For more information on ETFs, see here.

bulletiShares MSCI USA Value Factor ETF (VLUE).  E/R: 0.15%.  This ETF tracks the MSCI US Value Factor Index of large valuey US stocks.  For more information on ETFs, see here.
 
bulletDFA US Large Value Portfolio (DFLVX).  E/R: 0.27%.  This fund is extremely valuey (as measured by weighted average book to market value).  It basically has a strategy of emulating the returns of the 10% most valuey of the 90% of US publicly traded companies with the highest market capitalization.  As of 12/31/07, this fund's weighted average book to market ratio was 49% more valuey than VIVAX/VTV.  As of 1/31/08, it was 17% less valuey than that of RPV above.  We rated this fund below RPV because RPV approaches DFLVX's degree of "value-ness" while being expected to be perfectly capital gains tax efficient (DFLVX cannot be expected to be as tax efficient).  RPV's measure of "value-ness" is not limited to book-to-market ratio.

bulletVanguard Value Index Fund (VIVAX).  E/R: 0.24%.  This fund tracks the CRSP US Large Cap Value Index.

bulletiShares S&P 500 Value Fund (IVE).  E/R: 0.18%.  This ETF tracks the S&P 500 Value index.  For more information on ETFs, see here.
 
bulletSPDR S&P 500 Value Fund (SPYV).  E/R: 0.20%.  This ETF tracks the S&P 500 Value index.  For more information on ETFs, see here.

bulletiShares Russell Top 200 Value Fund (IWX).  E/R: 0.20%.  This ETF tracks the Russell Top 200 Value index.  For more information on ETFs, see here.

bullet
bulletiShares Russell 1000 Value Index Fund (IWD).  E/R: 0.25%.  This ETF tracks the Russell 1000 Value index.  For more information on ETFs, see here.

bulletSSgA streetTRACKS U.S. Large Cap Value Index Fund (ELV).  E/R: 0.21%.  This ETF tracks the Dow Jones Large Cap Value Index.  For more information on ETFs, see here.

bulletiShares Morningstar Large Value Fund (JKF).  E/R: 0.25%.  This ETF tracks stocks which Morningstar considers to be "Large Value."  For more information on ETFs, see here.
 
bulletWisdomTree Low P/E Fund (EZY).  E/R: 0.38%.  This ETF tracks the WisdomTree Low P/E Index of US Large Cap Value stocks (i.e., the 30% of stocks with market capitalizations above $200 million in the WisdomTree Earnings Index with the lowest P/E ratios).  For more information on ETFs, see here.  This fund seems too expensive and not valuey enough, compared with the better choices above
 
bulletWisdomTree Earnings Top 100 Fund (EEZ).  E/R: 0.38%.  This ETF tracks the WisdomTree Earnings Top 100 Index of US Large Cap Value stocks (i.e., the 100 stocks in the WisdomTree Earnings 500 Index with the highest earnings yields).  For more information on ETFs, see here.  This fund seems too expensive and not valuey enough, compared with the better choices above
 
bulletWisdomTree Dividend Top 100 Fund (DTN).  E/R: 0.38%.  This ETF tracks the WisdomTree Dividend Top 100 Index of US Large Cap Value stocks (i.e., those large cap stocks with high dividend yields).  For more information on ETFs, see here.  This fund seems too expensive and not valuey enough, compared with the better choices above.

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This web page contains the current opinions of Eric E. Haas at the time it is written and such opinions are subject to change without notice.  This web page is intended to serve two purposes:

bulletTo educate the public; and
bulletTo provide disclosure of Mr. Haas' opinions to prospective clients.  We believe that prospective clients are well-served by being made aware of what they are buying and what they are buying is advice that is based on these opinions.

We believe the information provided here to be useful and accurate at the time it is written.  Information contained herein has been obtained from sources believed to be reliable, but is not guaranteed. 

No investor should invest solely on the basis of information listed here.  Before investing, it is important to consult each prospective investment's prospectus and consider both its risk/return characteristics and its effect on your overall portfolio.

This information is not intended to be a substitute for specific individualized tax, legal, or investment planning advice.  Where specific advice is necessary or appropriate, Altruist recommends consultation with a qualified tax adviser, CPA, financial planner, or investment adviser.  If you would like to discuss the rationale or support for any particular idea expressed on this web page, feel free to contact us.

 

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