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)
 | Invesco 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.
|
| Bridgeway 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").
|
| EA 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").
|
| Avantis 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.
|
| DFA 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).
|
| Avantis 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.
|
| DFA 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).
|
| DFA 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.
|
| Invesco 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."
|
| Vanguard Small Cap Value Index Fund Admiral Shares (VSIAX).
E/R: 0.07%. This fund tracks the CRSP US Small Cap Value Index.
|
| Vanguard Small Cap Value ETF (VBR).
E/R: 0.07%. This ETF is a share class of the Vanguard Small
Cap Value Index Fund (VSIAX).
|
| Vericimetry 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).
|
| Vanguard 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).
|
| Vanguard 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).
|
| iShares S&P Small Cap 600 Value Fund (IJS).
E/R: 0.18%. This ETF tracks the S&P SmallCap 600
Value index.
|
| iShares Russell 2000 Value Fund (IWN).
E/R: 0.24%. This ETF tracks the Russell 2000 Value index.
|
| SPDR Dow Jones Small Cap Value ETF (SLYV).
E/R: 0.15%. This ETF tracks the S&P Small Cap 600 Value Index.
|
| iShares Morningstar Small Value ETF (ISCV). E/R: 0.06%. This ETF
tracks all stocks which Morningstar considers to be "Small Value." |
| Invesco 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.
|
| EA 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").
|
| Avantis 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.
|
| DFA 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).
|
| DFA 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).
|
| Invesco 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."
|
| Vanguard Small Cap Value Index Fund Admiral Shares (VSIAX).
E/R: 0.07%. This fund tracks the CRSP US Small Cap Value Index.
|
| Vanguard 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.
|
| Vanguard 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.
|
| Vanguard 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.
|
| iShares S&P Small Cap 600 Value Fund (IJS).
E/R: 0.18%. This ETF tracks the S&P Small Cap 600 Value Index.
|
| iShares Russell 2000 Value Fund (IWN).
E/R: 0.24%. This ETF tracks the Russell 2000 Value index.
|
| SPDR Dow Jones Small Cap Value ETF (SLYV).
E/R: 0.15%. This ETF tracks the S&P Small Cap 600 Value Index.
|
| iShares Morningstar Small Value ETF (ISCV). E/R: 0.06%. This ETF
tracks all stocks which Morningstar considers to be "Small Value." |
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.
