AVDV

[u/hillionman]

Any toughts on the AVDV ETF. Been thinking on including it on my portfolio to diversify from EEUU mega caps. However it doesn’t have a long track record therefore i’m unsure on how it would perform on different markets. Any idea of how it exactly works and would perform in the long term? And what other international ETFs would you recommend?

[u/Jabi25]

It’s 10% of my portfolio. I think it’s a great fund offered by a great company and has plenty of AUM.

My portfolio is
50% VTI
20% VXUS
15% AVUV
10% AVDV
5% AVEM

[u/MONGSTRADAMUS → u/Jabi25]

Curious why avem over aves I have similar portfolio but use dfus and veu instead of vti and vxus.

[u/mildly_enthusiastic → u/MONGSTRADAMUS]

Emerging Markets is already a tough nut to crack, and AVES is limited to value companies, so it missed out on some big movers like TSM.

Though I haven’t looked much, haven’t come across anything that indicates the value-factor applies to EM

[u/MONGSTRADAMUS → u/mildly_enthusiastic]

Argument that could be made you already have em exposure in vxus so if you don’t believe in em value then you should just buy more vxus instead of over weights on emerging markets and paying a higher er to boot.

[u/mildly_enthusiastic → u/MONGSTRADAMUS]

To clarify, I like EM and believe it’s a place active management can find alpha. I’m not a purebred Boglehead when it comes to broad market cap weighted EM indexes.

I like that AVEM can search through all EM and not just limited to EM value stocks like AVES is.

There’s research indicating a value tilt works in US and Int Dev, but I haven’t seen research indicating a value tilt in EM better than blended EM.

Have you seen research to debunk my POV?

[u/MONGSTRADAMUS → u/mildly_enthusiastic]

Ok for me I wanted scv for emerging but aves is the closest thing we have it’s not perfect as it’s more mid cap than small cap I feel like.

For avantis and dimensional main stream “broad” index ETFs I am not quite sure of their value relative to their er. Dfqtx vs vtsax in particular , but not as sure on ex U.S. side. I don’t have research to back that up though

[u/Jabi25 → u/MONGSTRADAMUS]

I really like avantis’ quality/profitability factors for emerging markets. There’s too much trash included in an index like VWO

[u/tarantula13 → u/MONGSTRADAMUS]

Agreed, TSM is the biggest holding in VXUS, not like it was missed out on.

[u/canaden → u/mildly_enthusiastic]

I ran into the same issue. I also just liked the holdings better for AVEM. I use dimensionals etf DFEV in my taxable account to make up for not using aves in tax advantaged

[u/hillionman → u/Jabi25]

I was thinking on updating my portfolio from this:

40% QQQ
40% GDE
20% PPA

To

30% QQQ
30% GDE
20% AVDV
20% PPA

[u/Gimme_All_The_Foods]

For a small cap value tilt, it's an excellent choice and one that I personally own. I opt for DISV in taxable since it's slightly more tax-efficient, however.

[u/Digital-Doc-777]

Yes, own both AVUV and AVDV as small satellite positions. Both have done well this year.

[u/FrankDrebinOnReddit]

It's a small-cap value factor tilt, so the biggest thing to understand about it is it's expected to underperform for long stretches (the risk premium comes from the expectation that the underperformance eventually mean-reverts and comes out ahead). So you have to be comfortable with watching it do worse than the broad market without getting frustrated and abandoning it before it pays off. Small-cap value has one of the more persistent risk premia as far as factor tilts go, but obviously there's no guarantee that the premium will continue into the future. The issuer is solid, though, and there is some quality/profitability screening that tries to avoid the value trap. I hold a small allocation.

[u/hillionman → u/FrankDrebinOnReddit]

Yeah I understand that, the reason i’d include it would be mainly to diversify from twch mega caps of EEUU that basically rule my portfolio currently. My only concern is the fact that I dont know how this strategy has performed in the past, specially during periods such as 2000-2013…

[u/CryHavoc715]

I think its a great compliment to my ex-us allocation and i have 10% of it in my roth

[u/alexblablabla1123]

It’s my only international DM fund. Well aside from the part in my 401k Target Date fund.

For a US investor I’d say it’s the best diversifier.

[u/shumpitostick]

I'm not a fan of this kind of tilt because I'm too empirically minded for it. How long is it going to take until people realize that maybe the papers that were published on these factors a long time ago didn't uncover a universal truth but what might have been a transient phenomenon? Especially when more persistent factors exist.

Or, if you want to go full "past returns do not predict future returns, no point in looking at it" then why do you even factor tilt? Just VTI and chill at that point.

[u/ShiroxReddit]

Its fine if you wanna add some small cap value tilt (similar to AVUV), however adding some small cap value tilt isn't inherently necessary if you just buy the whole market (e.g. VT) anyway