Altruist Financial Advisors LLC
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Domestic Small-Cap Value Funds

 

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There is good reason to believe that small stocks and value stocks will, in the long run and on average, tend to have higher risk-adjusted returns than large and growth stocks, respectively.  In order to seek exposure to both the small and value risk factors at the same time, it seems natural to invest in a small-cap value fund.

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)

bulletInvesco S&P SmallCap Value with Momentum ETF (XSVM).  E/R: 0.36%.  This fund attempts to track the S&P SmallCap 600 High Momentum Value Index.  This index starts with the S&P SmallCap 600.  It takes the 40% most valuey stocks thereof.  Then it ranks those by momentum score.  It takes the 50% with the highest momentum score.  Then it weights the remaining stocks by value-ness.  This gives a very valuey portfolio which also has some momentum exposure.

bulletBridgeway Omni Small-Cap Value Fund (BOSVX).  E/R: 0.47%.  This fund is both extremely small (as measured by weighted average market capitalization) and extremely valuey (as measured by weighted average book to market value).  It basically has a strategy of emulating the returns of the 20% most valuey of the 10% of US publicly traded companies with the lowest market capitalization (excluding "penny stocks").
 
bulletEA Bridgeway Omni Small-Cap Value ETF (BSVO).  E/R: 0.47%.  This ETF is both extremely small (as measured by weighted average market capitalization) and extremely valuey (as measured by weighted average book to market value).  It basically has a strategy of emulating the returns of the 20% most valuey of the 10% of US publicly traded companies with the lowest market capitalization (excluding "penny stocks").
 
bulletAvantis U.S. Small Cap Value Fund (AVUVX).  E/R: 0.25%.  This ETF buys small cap US stocks that are both very valuey and profitable.

bulletDFA US Small Cap Value Portfolio (DFSVX).  E/R: 0.30%.  This fund is both small (as measured by weighted average market capitalization) and valuey (as measured by weighted average book to market value).  It basically has a strategy of emulating the returns of the 25% most valuey of the 10% of US publicly traded companies with the lowest market capitalization (or those smaller than the 1000th largest, whichever of the two measures which results in a higher market cap breakpoint).

bulletAvantis U.S. Small Cap Value ETF (AVUV).  E/R: 0.25%.  This ETF buys small cap US stocks that are both very valuey and profitable.

bulletDFA US Small Cap Value ETF (DFSV).  E/R: 0.31%.  This fund is both relatively small (as measured by weighted average market capitalization) and valuey (as measured by weighted average book to market value).

bulletDFA US Targeted Value Portfolio (DFFVX).  E/R: 0.29%.  This fund is similar to DFSVX above, only with somewhat less of a small-cap orientation.  Specifically, it excludes the largest 86% or so of companies.  It basically has a strategy of emulating the returns of the 25% most valuey of the US publicly traded companies with a market capitalization within the smallest 14% of all such companies.  We don't like this fund as much as DFSVX because the stocks it invests in aren't as small in market capitalization or as valuey.

bulletInvesco S&P SmallCap 600 Pure Value ETF (RZV).  E/R: 0.35%.  This ETF tracks the S&P SmallCap 600 Pure Value Index.  It is both extremely small (as measured by weighted average market capitalization) and 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."

bulletVanguard Small Cap Value Index Fund Admiral Shares (VSIAX).  E/R: 0.07%.  This fund tracks the CRSP US Small Cap Value Index.

bulletVanguard Small Cap Value ETF (VBR).  E/R: 0.07%.  This ETF is a share class of the Vanguard Small Cap Value Index Fund (VSIAX).

bulletVericimetry US Small Cap Value Fund (VYSVX).  E/R: 0.61%.  This fund is both small (as measured by weighted average market capitalization) and valuey (as measured by weighted average book to market value).  It basically has a strategy of emulating the returns of the most valuey of the 10% of US publicly traded companies with the lowest market capitalization (or those smaller than the 1200th largest, whichever of the two measures which results in a higher market cap breakpoint).
 
bulletVanguard S&P Small Cap 600 Value ETF (VIOV).  E/R: 0.15%.  This ETF is a share class of the Vanguard S&P Small Cap 600 Value Index Fund Institutional Shares (VSMVX).

bulletVanguard Russell 2000 Value ETF (VTWV).  E/R: 0.15%.  This ETF is a share class of the Vanguard Russell 2000 Value Index Fund Institutional Shares (VRTVX).

bulletiShares S&P Small Cap 600 Value Fund (IJS).  E/R: 0.18%.  This ETF tracks the S&P SmallCap 600 Value index.

bulletiShares Russell 2000 Value Fund (IWN).  E/R: 0.24%.  This ETF tracks the Russell 2000 Value index.
 
bulletSPDR Dow Jones Small Cap Value ETF (SLYV).  E/R: 0.15%.  This ETF tracks the S&P Small Cap 600 Value Index.
 
bulletiShares Morningstar Small Value ETF (ISCV).  E/R: 0.06%.  This ETF tracks all stocks which Morningstar considers to be "Small Value."

Taxable Accounts

bulletInvesco S&P SmallCap Value with Momentum ETF (XSVM).  E/R: 0.36%.  This fund attempts to track the S&P SmallCap 600 High Momentum Value Index.  This index starts with the S&P SmallCap 600.  It takes the 40% most valuey stocks thereof.  Then it ranks those by momentum score.  It takes the 50% with the highest momentum score.  Then it weights the remaining stocks by value-ness.  This gives a very valuey portfolio which also has some momentum exposure.

bulletEA Bridgeway Omni Small-Cap Value ETF (BSVO).  E/R: 0.47%.  This ETF is both extremely small (as measured by weighted average market capitalization) and extremely valuey (as measured by weighted average book to market value).  It basically has a strategy of emulating the returns of the 20% most valuey of the 10% of US publicly traded companies with the lowest market capitalization (excluding "penny stocks").
 
bulletAvantis U.S. Small Cap Value ETF (AVUV).  E/R: 0.25%.  This ETF buys small cap US stocks that are both very valuey and profitable.

bulletDFA US Small Cap Value ETF (DFSV).  E/R: 0.31%.  This fund is both relatively small (as measured by weighted average market capitalization) and valuey (as measured by weighted average book to market value).

bulletDFA U.S. Targeted Value ETF (DFAT).  E/R: 0.34%.  This fund is both relatively small (as measured by weighted average market capitalization) and valuey (as measured by weighted average book to market value).  It basically has a strategy of emulating the returns of the 25% most valuey of the 18% of US publicly traded companies with the lowest market capitalization (i.e., those smaller than the 500th largest).

bulletInvesco S&P SmallCap 600 Pure Value ETF (RZV).  E/R: 0.35%.  This ETF tracks the S&P SmallCap 600 Pure Value Index.  It is both extremely small (as measured by weighted average market capitalization) and 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."

bulletVanguard Small Cap Value Index Fund Admiral Shares (VSIAX).  E/R: 0.07%.  This fund tracks the CRSP US Small Cap Value Index.

bulletVanguard Small Cap Value ETF (VBR).  E/R: 0.07%.  This ETF is a share class of the Vanguard Small Cap Value Index Fund (VSIAX).  While ETFs by their very nature tend to be more (capital gains) tax-efficient than non-ETFs, Vanguard ETFs are an exception — they will be exactly as tax-efficient as their parent fund.
 
bulletVanguard S&P Small Cap 600 Value ETF (VIOV).  E/R: 0.15%.  This ETF is a share class of the Vanguard S&P Small Cap 600 Value Index Fund Institutional Shares (VSMVX).  While ETFs by their very nature tend to be more (capital gains) tax-efficient than non-ETFs, Vanguard ETFs are an exception — they will be exactly as tax-efficient as their parent fund.

bulletVanguard Russell 2000 Value ETF (VTWV).  E/R: 0.15%.  This ETF is a share class of the Vanguard Russell 2000 Value Index Fund Institutional Shares (VRTVX).  While ETFs by their very nature tend to be more (capital gains) tax-efficient than non-ETFs, Vanguard ETFs are an exception — they will be exactly as tax-efficient as their parent fund.

bulletiShares S&P Small Cap 600 Value Fund (IJS).  E/R: 0.18%.  This ETF tracks the S&P Small Cap 600 Value Index.

bulletiShares Russell 2000 Value Fund (IWN).  E/R: 0.24%.  This ETF tracks the Russell 2000 Value index.
 
bulletSPDR Dow Jones Small Cap Value ETF (SLYV).  E/R: 0.15%.  This ETF tracks the S&P Small Cap 600 Value Index.
 
bulletiShares Morningstar Small Value ETF (ISCV).  E/R: 0.06%.  This ETF tracks all stocks which Morningstar considers to be "Small Value."

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This web page contains the current opinions of Eric E. Haas at the time it is writtenand 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 buyingand 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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