TxAggie's Avantis Adventure

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txaggie
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TxAggie's Avantis Adventure

Post by txaggie »

Welcome to TxAggie's Avantis Adventure. Hang on because it is going to be a wild and crazy ride. I added a 1.1 million dollar value tilt to my portfolio using Avantis ETFs. Starting this thread to track and discuss my value tilt.

Strategy
Tilt a portion of my equity portfolio to value. Maintain this tilt for life. Rebalance annually.
50% US Small Cap Value.
25% Developed Markets Small Cap Value.
25% Emerging Markets Value.

The Tilt
Purchased on 4 March 2022.

Code: Select all

50.05%, $553,640, Avantis US Small Cap Value (AVUV).  
24.98%, $276,378, Avantis International Small Cap Value (AVDV).
24.97%, $276,263, Avantis Emerging Markets Value (AVES).
Rationale
I was shocked out how well this allocation back tested when using DFA funds. It really outperformed the US total stock market. I expect the out performance of this tilt has a lot to do with the DFA emerging markets value fund (DFEVX) having a an inception date of April 1998. So let's party like it's 1999!

Portfolio Visualizer Backtest Result with an Initial amount of $1 million and withdrawing $3,333 per month.

Image

Larry mentioned that these Avantis value ETFs are currently cheap.
Image

This is the Shiller PE ratio on the day I started the tilt.
Image
Thanks for reading about my Avantis Adventure and decision to tilt :sharebeer.
Nathan Drake
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Re: TxAggie's Avantis Adventure

Post by Nathan Drake »

How big is the tilt?
20% VOO | 20% VXUS | 20% AVUV | 20% AVDV | 20% AVES
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txaggie
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Re: TxAggie's Avantis Adventure

Post by txaggie »

Nathan Drake wrote: Mon Mar 07, 2022 1:48 am How big is the tilt?
I am currently tilting 60% of the equity portion. I am directing new contributions to the tilt until it grows to 80%.

This is the desired equity allocation in my IPS.
40% US Small Cap Value.
20% Developed Markets Small Cap Value.
20% Emerging Markets Value.
20% US Total Stock Market.
muffins14
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Re: TxAggie's Avantis Adventure

Post by muffins14 »

Good luck. Big tilt.

How did you decide on tilting 80% to value?
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Nathan Drake
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Re: TxAggie's Avantis Adventure

Post by Nathan Drake »

Good luck, I have a similarly positioned tilt

I think there’s nothing wrong with it if you are disciplined
20% VOO | 20% VXUS | 20% AVUV | 20% AVDV | 20% AVES
roth evangelist
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Re: TxAggie's Avantis Adventure

Post by roth evangelist »

Thanks for starting this thread. I hope we can win over more Avantisheads over time. I started using Avantis funds for a tilt in my HSA a few months ago.

That portfolio looks like this:

40% VTI
20% VXUS
25% AVUV
5% AVDV
5% AVES
5% Misc. (individual stocks)

That's a 35% tilt broken down about 71/14/14. So much more US value.

Over time my goal is to correlate most of my portfolio (except for taxable) along these lines:

55% VTI
20% VXUS
15% AVUV
5% AVDV
5% AVES

So a 25% tilt at 60/20/20.

Not nearly as ambitious as yours. Good luck.
Last edited by roth evangelist on Mon Mar 07, 2022 4:09 pm, edited 1 time in total.
Trek9
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Re: TxAggie's Avantis Adventure

Post by Trek9 »

I like it! Are you 100% equity? or any allocation to anything else?
Startled Cat
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Re: TxAggie's Avantis Adventure

Post by Startled Cat »

I also have a very large value tilt, heavily weighted towards EM and developed international.

My main holdings have generally been Schwab fundamental-weighted ETFs (FNDE/FNDF/FNDC), but in the last few days I've done some major TLH into Avantis ETFs. I did this only after agonizing for some time over the fact that the Avantis funds have outperformed their Schwab counterparts over recent months (for example, check out AVDV vs. FNDC). Reversion to the mean might make this TLH activity a bad move. However, I've been warming to the Avantis products and like the idea of holding them long-term.

I also have a substantial position in DFJ (Japan SCV). Not sure if the country-specific risk and high ER are really worth it, but the valuation metrics are really tempting.

Unlike the OP, I don't necessarily intend to maintain a value tilt for life. I understand that value is much cheaper right now than it has historically been, when measured against growth. If/when that changes in a major way, I expect to direct contributions towards total market indices rather than value funds.
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Re: TxAggie's Avantis Adventure

Post by nedsaid »

You are braver than I am. I do not advocate extreme tilts. If you have the discipline to stick with your plan, you should do just fine. What too many people do is keep changing their investment strategies which is not a prescription for successful investing.
A fool and his money are good for business.
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txaggie
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Re: TxAggie's Avantis Adventure

Post by txaggie »

muffins14 wrote: Mon Mar 07, 2022 9:14 am Good luck. Big tilt.

How did you decide on tilting 80% to value?
I wanted the tilt to be large enough to matter. I didn't want to bet everything on value so I kept 20% in US Total Stock Market. I developed this strategy by back testing DFA value funds and Vanguard total stock market in Portfolio Visualizer.

"The biggest risk of all is not taking one." — Mellody Hobson
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Re: TxAggie's Avantis Adventure

Post by txaggie »

Trek9 wrote: Mon Mar 07, 2022 2:29 pm I like it! Are you 100% equity? or any allocation to anything else?
Thanks! I have 20.93% of my portfolio in stable value funds.
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txaggie
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Re: TxAggie's Avantis Adventure

Post by txaggie »

nedsaid wrote: Mon Mar 07, 2022 8:01 pm You are braver than I am. I do not advocate extreme tilts. If you have the discipline to stick with your plan, you should do just fine. What too many people do is keep changing their investment strategies which is not a prescription for successful investing.
I completely agree that this aggressive tilt will require discipline to maintain.

I am going to stick with it through thick and thin as its written in my IPS. The die is cast.
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txaggie
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Re: TxAggie's Avantis Adventure

Post by txaggie »

roth evangelist wrote: Mon Mar 07, 2022 2:06 pm Thanks for starting this thread. I hope we can win over more Avantisheads over time. I started using Avantis funds for a tilt in my HSA a few months ago.

That portfolio looks like this:

40% VTI
20% VXUS
25% AVUV
5% AVDV
5% AVES
5% Misc. (individual stocks)

That's a 35% tilt broken down about 71/14/14. So much more US value.

Over time my goal is to correlate most of my portfolio (except for taxable) along these lines:

55% VTI
20% VXUS
15% AVUV
5% AVDV
5% AVES

So a 25% tilt at 60/20/20.

Not nearly as ambitious as yours. Good luck.
Avantisheads, I like that term.

Are you doing something different in taxable? If so what? I have been thinking about the tax efficient fund placement and so far have decided that I am okay with holding AVUV and AVDV in taxable but only plan to hold AVES in retirement accounts.

Good luck with your tilt as well. :beer
roth evangelist
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Re: TxAggie's Avantis Adventure

Post by roth evangelist »

txaggie wrote: Mon Mar 07, 2022 9:33 pm
roth evangelist wrote: Mon Mar 07, 2022 2:06 pm Thanks for starting this thread. I hope we can win over more Avantisheads over time. I started using Avantis funds for a tilt in my HSA a few months ago.

That portfolio looks like this:

40% VTI
20% VXUS
25% AVUV
5% AVDV
5% AVES
5% Misc. (individual stocks)

That's a 35% tilt broken down about 71/14/14. So much more US value.

Over time my goal is to correlate most of my portfolio (except for taxable) along these lines:

55% VTI
20% VXUS
15% AVUV
5% AVDV
5% AVES

So a 25% tilt at 60/20/20.

Not nearly as ambitious as yours. Good luck.
Avantisheads, I like that term.

Are you doing something different in taxable? If so what? I have been thinking about the tax efficient fund placement and so far have decided that I am okay with holding AVUV and AVDV in taxable but only plan to hold AVES in retirement accounts.

Good luck with your tilt as well. :beer
My taxable is 50% VOO, 25% VXUS and 25% VFVA. I like VFVA because it seems like the most tax efficient way to get value exposure (100% qualified dividends). I suppose time will tell if Avantis funds are tax efficient enough for a taxable account.
Last edited by roth evangelist on Tue Mar 08, 2022 12:14 am, edited 1 time in total.
Massdriver
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Re: TxAggie's Avantis Adventure

Post by Massdriver »

Good luck! That’s one heck of a tilt. As long as you can stomach tracking error, I don’t see a big issue with it. The biggest risk imo is behavioral and stomaching larger draw downs and tracking error.

50% tilt targeted here. I’m not quite at my target yet. I have some positions in SLYV in my taxable with unrealized gains, so not all Avantis, but all new $ going to AVUV, AVDV, and AVES.
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Re: TxAggie's Avantis Adventure

Post by Nathan Drake »

I’m letting my tilt grow above 50%.

Just TLH’d a bunch of index funds into Avantis

Honestly I see no problem with 100% global SCV as long as you don’t make behavioral mistakes

That approach gives you high beta (market exposure) and significant risk premiums.
20% VOO | 20% VXUS | 20% AVUV | 20% AVDV | 20% AVES
IndyMachiner
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Re: TxAggie's Avantis Adventure

Post by IndyMachiner »

So do any of you hold Avantis funds in your taxable accounts? I also saw DFA has some tax managed value ETFs. Are there any advantages of holding those in a taxable since they are already ETFs and not mutual funds?
50% Global CAPM Index Fund 12.5% US Concentrated Value 12.5% Foreign Concentrated Value 12.5% US Concentrated Momentum 12.5% Foreign Concentrated Momentum
17outs
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Re: TxAggie's Avantis Adventure

Post by 17outs »

I do. But I have some large intl.

VTI 25%
AVUV 20%
AVIV 10%
AVES 10%
AVDV 10%
LTTs 25%
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Re: TxAggie's Avantis Adventure

Post by Boilermaker82 »

I’ve been a huge fan of Avantis for a few years now. I’ve primarily had a 15% tilt to AVUV across the board. In one of my larger accounts, I’ve recently added another 15% tilt with AVDV and AVES (about 15% between the two, roughly 8/7% respectively).

If I expand it across my entire portfolio, my overall “Avantis tilt” would ideally be something like:

- 50% VTI
- 15% AVUV

- 20% VXUS
- 8% AVDV
- 7% AVES

That gives me 65/35 US/Intl, and 30% value tilt.
Don’t sweat the petty things and don’t pet the sweaty things.
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Re: TxAggie's Avantis Adventure

Post by muffins14 »

17outs wrote: Tue Mar 08, 2022 5:17 pm I do. But I have some large intl.

VTI 25%
AVUV 20%
AVIV 10%
AVES 10%
AVDV 10%
LTTs 25%
Elegant, I like it
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txaggie
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Re: TxAggie's Avantis Adventure

Post by txaggie »

Nathan Drake wrote: Tue Mar 08, 2022 12:29 am I’m letting my tilt grow above 50%.

Just TLH’d a bunch of index funds into Avantis

Honestly I see no problem with 100% global SCV as long as you don’t make behavioral mistakes

That approach gives you high beta (market exposure) and significant risk premiums.
Nice! Good move on TLH into Avantis. Your posts here and over at rational reminder have been influential in my decision to tilt to value.
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Re: TxAggie's Avantis Adventure

Post by Massdriver »

IndyMachiner wrote: Tue Mar 08, 2022 2:04 pm So do any of you hold Avantis funds in your taxable accounts? I also saw DFA has some tax managed value ETFs. Are there any advantages of holding those in a taxable since they are already ETFs and not mutual funds?
I have plenty AVDV and some AVES/AVUV in my taxable. Everyone's circumstances are somewhat different. I have a large taxable account for reasons that were not in my control, but I want both international and factor diversification and I'm willing to pay the price in some tax efficiency to get it.

I'm actually looking to TLH VWO if it gets down a bit more and throwing 100% of my taxable EM allocation into AVES.
17outs
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Re: TxAggie's Avantis Adventure

Post by 17outs »

Curious of others thoughts if you were looking to replace total international with AV etfs. I currently do equal parts large value small value and em but curious if others are using those funds or those ratios.
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Re: TxAggie's Avantis Adventure

Post by roth evangelist »

17outs wrote: Wed Mar 09, 2022 10:33 am Curious of others thoughts if you were looking to replace total international with AV etfs. I currently do equal parts large value small value and em but curious if others are using those funds or those ratios.
I view my portfolio as strictly divided between core holdings and satellite holdings. In my core position go cheap total market index funds from Vanguard, so U.S. and international. In my satellite position goes my value tilt, where I have selected Avantis ETFs. I don't like Avantis's other funds like AVUS because I don't feel it distinguishes enough from VTI to justify paying more. It feels like a half measure.
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Re: TxAggie's Avantis Adventure

Post by txaggie »

Tracking performance of my adventure compared to US total stock market. Planning to update these tracking numbers at the start of each quarter.

Image
freyj6
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Re: TxAggie's Avantis Adventure

Post by freyj6 »

This is pretty similar to my portfolio with a few small differences. I'll post my portfolio once I get done moving a few things between accounts and paying taxes.

Mine is roughly 40% AVUV, 10% QVAL, 10% AVDV, 5% IVAL, 15% AVES, 20% VSS (due to 401k constraints).

I think it's always fun to have record threads like this so you can have a real-life history of performance rather than just back tests.
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Re: TxAggie's Avantis Adventure

Post by countmein »

Your backtest shouldn't be the thing that's convincing you to tilt, for two reasons.

1) The withdrawal input is warping the CAGR. With no withdrawals, the CAGR delta in this period is a much milder 10.9 vs 8.0.

2) Try a different date (say 2005, or 1995 with disvx instead of dfevx) and you find VTSMX crushing the DFA portfolio.

Fact is, for ~30 years International has lagged the US and the value premium has been approximately zero.

This can be used as an argument for or against tilting, depending on how you see it.

If your algorithm is 'invest in what backtests best over the past 20-30 years', the international/value tilted portfolio aint it.
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Re: TxAggie's Avantis Adventure

Post by txaggie »

freyj6 wrote: Wed Apr 06, 2022 4:04 pm This is pretty similar to my portfolio with a few small differences. I'll post my portfolio once I get done moving a few things between accounts and paying taxes.

Mine is roughly 40% AVUV, 10% QVAL, 10% AVDV, 5% IVAL, 15% AVES, 20% VSS (due to 401k constraints).

I think it's always fun to have record threads like this so you can have a real-life history of performance rather than just back tests.
Good luck with your tilt! You are a fan of Avantis too.
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Re: TxAggie's Avantis Adventure

Post by txaggie »

countmein wrote: Wed Apr 06, 2022 4:55 pm Your backtest shouldn't be the thing that's convincing you to tilt, for two reasons.

1) The withdrawal input is warping the CAGR. With no withdrawals, the CAGR delta in this period is a much milder 10.9 vs 8.0.

2) Try a different date (say 2005, or 1995 with disvx instead of dfevx) and you find VTSMX crushing the DFA portfolio.

Fact is, for ~30 years International has lagged the US and the value premium has been approximately zero.

This can be used as an argument for or against tilting, depending on how you see it.

If your algorithm is 'invest in what backtests best over the past 20-30 years', the international/value tilted portfolio aint it.
Both good points. Is there a single 20+ year period where US Total Market beats US Small Cap Value? I can't find one when back testing. I also looked and couldn't find a 20+ year period where VTSMX beat DFSVX.

US SCV vs US TSM backtest
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txaggie
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Re: TxAggie's Avantis Adventure

Post by txaggie »

txaggie wrote: Wed Apr 06, 2022 6:18 pm
countmein wrote: Wed Apr 06, 2022 4:55 pm Your backtest shouldn't be the thing that's convincing you to tilt, for two reasons.

1) The withdrawal input is warping the CAGR. With no withdrawals, the CAGR delta in this period is a much milder 10.9 vs 8.0.

2) Try a different date (say 2005, or 1995 with disvx instead of dfevx) and you find VTSMX crushing the DFA portfolio.

Fact is, for ~30 years International has lagged the US and the value premium has been approximately zero.

This can be used as an argument for or against tilting, depending on how you see it.

If your algorithm is 'invest in what backtests best over the past 20-30 years', the international/value tilted portfolio aint it.
Both good points. Is there a single 20+ year period where US Total Market beats US Small Cap Value? I can't find one when back testing. I also looked and couldn't find a 20+ year period where VTSMX beat DFSVX.

US SCV vs US TSM backtest
I did a find 20 year period where US Total Stock Market beat US Small Cap value. The most recent period. Still haven't found a 20 year period where VTSMX beats DFSVX.

20 year backtest
countmein
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Re: TxAggie's Avantis Adventure

Post by countmein »

The apt, risk adjusted comparison is 1.3x TSM vs DFSVX. In PV, set VTSMX to 130, add CASHX at -30.
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Re: TxAggie's Avantis Adventure

Post by freyj6 »

countmein wrote: Wed Apr 06, 2022 8:01 pm The apt, risk adjusted comparison is 1.3x TSM vs DFSVX. In PV, set VTSMX to 130, add CASHX at -30.
In that case it seems like you should also factor in the cost of leverage.
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Re: TxAggie's Avantis Adventure

Post by firedinky »

Thanks for starting this thread. It will be interesting to follow. Less extreme tilt here and I prefer NTSX for large cap US. Total US market really adds nothing with that much tilt. Good luck.
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Re: TxAggie's Avantis Adventure

Post by drumboy256 »

glad to see another value junkie! :sharebeer
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Re: TxAggie's Avantis Adventure

Post by steubens »

I've been leaning towards this approach myself, right now am 85% equities with 5% short-term treasuries, 5% intermediate-term treasuries, and 5% cash. I have a slight home bias with a 65/35 US/Intl split:

52% VTI
13% AVUV

23% VXUS
6% AVDV
6% AVES

As you can see, going a little more conservative with my value tilt. I like what Avantis is doing, though...kind of tempted by AVUS and AVDE, but not sure it's worth the shift versus VTI/VXUS. Also a little hesitant to go "all-in" with Avantis as these funds haven't been around as long.
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Re: TxAggie's Avantis Adventure

Post by mokaThought »

I am in essence…

12% large blend (S&P 500/400)
24% AVLV
24% AVUV

6.7% ex-US developed mkts blend*
8% DFIV
16.8% AVDV
1.6% South Korea
6.8% DIHP (DFA ex-U.S. high profitability)

* complicated mix of IDEV, MSCI EAFE, and BBCA Canada ETF.

If AVIV gets better in AUM, I’ll consider swapping.
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Re: TxAggie's Avantis Adventure

Post by steubens »

Did some TLH'ing and temporarily wound up with an (almost) all-Avantis portfolio. Very clean!

44% AVUS (edit: now 27% VTI in taxable and 17% AVUS in Roth)
11% AVUV

22% AVDE (edit: now 22% VXUS)
4% AVDV
4% AVES

10% VGSH/VGIT (edit: now 10% GOVT)
5% cash

I bumped my AVDV/AVES down a bit to maintain my fairly light factor tilt. I'll probably harvest AVUS/AVDE back into VTI/VXUS in another month due to their wider variety of holdings, lower expense ratio, and better liquidity. I imagine the market will probably dip again into the summer, but it if surprises me and rips, then I might not want to realize all those gains and then I'll be probably living with AVUS/AVDE for a while.
Last edited by steubens on Fri Jun 03, 2022 11:45 am, edited 3 times in total.
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Re: TxAggie's Avantis Adventure

Post by muffins14 »

It seems suboptimal to TLH between factor funds and total-market funds, given that presumably the reason you hold the factor fund is that the returns are not highly correlated. I imagine you would be selling value when value is down in order to buy blend when blend is potentially up, and then selling blend when blend is low and buying value when value is potentially high.

At least that is likely to happen more often that if you were doing TLH from value to value and blend to blend
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Re: TxAggie's Avantis Adventure

Post by KyleAAA »

I have a 50% tilt using mostly Advantis now (previously IJS and FNDC), except I still use DGS for emerging markets. Most consequential for my portfolio over the last decade has been my 50% international allocation, though. My portfolio has performed well but it hasn’t gone bonkers like a VTI-centric portfolio has.
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Re: TxAggie's Avantis Adventure

Post by steubens »

muffins14 wrote: Thu Jun 02, 2022 8:47 am It seems suboptimal to TLH between factor funds and total-market funds, given that presumably the reason you hold the factor fund is that the returns are not highly correlated. I imagine you would be selling value when value is down in order to buy blend when blend is potentially up, and then selling blend when blend is low and buying value when value is potentially high.

At least that is likely to happen more often that if you were doing TLH from value to value and blend to blend
I think that's a really good point regarding the TLH timing. My main reason for going back to the total-market funds is that I don't want to make that much of a bet on value...a 20-25% tilt in each area is enough to scratch that itch for now. I doubt I would go back-and-forth too often for the reason you stated (I sort of ran out of other TLH partners between my various accounts).
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Re: TxAggie's Avantis Adventure

Post by er999 »

txaggie wrote: Mon Mar 07, 2022 8:14 am
Nathan Drake wrote: Mon Mar 07, 2022 1:48 am How big is the tilt?
I am currently tilting 60% of the equity portion. I am directing new contributions to the tilt until it grows to 80%.

This is the desired equity allocation in my IPS.
40% US Small Cap Value.
20% Developed Markets Small Cap Value.
20% Emerging Markets Value.
20% US Total Stock Market.
With 80% small cap value tilt I wouldn’t call it a tilt but rather a lopsided portfolio (can’t think of a catchier name). I hope it works out but back tests and proponents of small cap value make it sound like it’s guaranteed as long as you hold it for enough decades. Not sure that is the case, there are long threads debating it on here but interesting for you to post. Might be better to not do such an extreme tilt to small cap value. Questions to think about:
1. How many years have you been investing and how many portfolio changes have you made? I think it’s okay to change things as you learn more / consider more ideas but doesn’t seem ideal if that happens every 1-2 years when there’s a new exciting idea.
2. If you change your portfolio more than once a decade (and even that may be too soon) you might be at risk of performance chasing (or the reverse thinking that just because something has underperformed doesn’t mean it’s guaranteed to outperform in the next few years). If your portfolio underperforms in the next 3-5 years and you then go back to a 80% total us market you would be worse off then if you picked a modest us small cap value tilt 10-20% that you stick with for decades.
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Re: TxAggie's Avantis Adventure

Post by txaggie »

er999 wrote: Fri Jun 03, 2022 10:44 am
txaggie wrote: Mon Mar 07, 2022 8:14 am
Nathan Drake wrote: Mon Mar 07, 2022 1:48 am How big is the tilt?
I am currently tilting 60% of the equity portion. I am directing new contributions to the tilt until it grows to 80%.

This is the desired equity allocation in my IPS.
40% US Small Cap Value.
20% Developed Markets Small Cap Value.
20% Emerging Markets Value.
20% US Total Stock Market.
With 80% small cap value tilt I wouldn’t call it a tilt but rather a lopsided portfolio (can’t think of a catchier name). I hope it works out but back tests and proponents of small cap value make it sound like it’s guaranteed as long as you hold it for enough decades. Not sure that is the case, there are long threads debating it on here but interesting for you to post. Might be better to not do such an extreme tilt to small cap value. Questions to think about:
1. How many years have you been investing and how many portfolio changes have you made? I think it’s okay to change things as you learn more / consider more ideas but doesn’t seem ideal if that happens every 1-2 years when there’s a new exciting idea.
2. If you change your portfolio more than once a decade (and even that may be too soon) you might be at risk of performance chasing (or the reverse thinking that just because something has underperformed doesn’t mean it’s guaranteed to outperform in the next few years). If your portfolio underperforms in the next 3-5 years and you then go back to a 80% total us market you would be worse off then if you picked a modest us small cap value tilt 10-20% that you stick with for decades.
Yes, it is an extreme tilt. I am committed to holding this tilt long term. I appreciate your feedback and questions to consider.
Nathan Drake
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Re: TxAggie's Avantis Adventure

Post by Nathan Drake »

er999 wrote: Fri Jun 03, 2022 10:44 am
txaggie wrote: Mon Mar 07, 2022 8:14 am
Nathan Drake wrote: Mon Mar 07, 2022 1:48 am How big is the tilt?
I am currently tilting 60% of the equity portion. I am directing new contributions to the tilt until it grows to 80%.

This is the desired equity allocation in my IPS.
40% US Small Cap Value.
20% Developed Markets Small Cap Value.
20% Emerging Markets Value.
20% US Total Stock Market.
With 80% small cap value tilt I wouldn’t call it a tilt but rather a lopsided portfolio (can’t think of a catchier name). I hope it works out but back tests and proponents of small cap value make it sound like it’s guaranteed as long as you hold it for enough decades. Not sure that is the case, there are long threads debating it on here but interesting for you to post. Might be better to not do such an extreme tilt to small cap value. Questions to think about:
1. How many years have you been investing and how many portfolio changes have you made? I think it’s okay to change things as you learn more / consider more ideas but doesn’t seem ideal if that happens every 1-2 years when there’s a new exciting idea.
2. If you change your portfolio more than once a decade (and even that may be too soon) you might be at risk of performance chasing (or the reverse thinking that just because something has underperformed doesn’t mean it’s guaranteed to outperform in the next few years). If your portfolio underperforms in the next 3-5 years and you then go back to a 80% total us market you would be worse off then if you picked a modest us small cap value tilt 10-20% that you stick with for decades.
I do not consider 100% SCV to be lopsided.

It is a long only portfolio which has a high loading on the market beta factor.

Sure, you can underperform for a long time. But is it likely to? No, 80% of the time it should outperform. It is higher risk.

Even this past decade, it compounded at 10% annually vs. 15% for VTI. Underperformance is not always BAD performance.
20% VOO | 20% VXUS | 20% AVUV | 20% AVDV | 20% AVES
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txaggie
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Re: TxAggie's Avantis Adventure

Post by txaggie »

er999 and Nathan Drake your comments got me thinking about how to quantify the lopsidedness of my adventure. I do not consider my adventure to be a lopsided allocation. My adventure provides significant stock style diversification and global diversification.
With 80% small cap value tilt I wouldn’t call it a tilt but rather a lopsided portfolio
I do not consider 100% SCV to be lopsided.
Perhaps the US total stock market is lopsided towards large cap growth?

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unclescrooge
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Re: TxAggie's Avantis Adventure

Post by unclescrooge »

countmein wrote: Wed Apr 06, 2022 4:55 pm Your backtest shouldn't be the thing that's convincing you to tilt, for two reasons.

1) The withdrawal input is warping the CAGR. With no withdrawals, the CAGR delta in this period is a much milder 10.9 vs 8.0.

2) Try a different date (say 2005, or 1995 with disvx instead of dfevx) and you find VTSMX crushing the DFA portfolio.

Fact is, for ~30 years International has lagged the US and the value premium has been approximately zero.

This can be used as an argument for or against tilting, depending on how you see it.

If your algorithm is 'invest in what backtests best over the past 20-30 years', the international/value tilted portfolio aint it.
+1

Designing a portfolio based on what worked best in backtesting is a terrible way to design a portfolio.
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Re: TxAggie's Avantis Adventure

Post by Nathan Drake »

countmein wrote: Wed Apr 06, 2022 4:55 pm Your backtest shouldn't be the thing that's convincing you to tilt, for two reasons.

1) The withdrawal input is warping the CAGR. With no withdrawals, the CAGR delta in this period is a much milder 10.9 vs 8.0.

2) Try a different date (say 2005, or 1995 with disvx instead of dfevx) and you find VTSMX crushing the DFA portfolio.

Fact is, for ~30 years International has lagged the US and the value premium has been approximately zero.

This can be used as an argument for or against tilting, depending on how you see it.

If your algorithm is 'invest in what backtests best over the past 20-30 years', the international/value tilted portfolio aint it.
A globally diversified value oriented portfolio has performed substantially better than US TSM only with far less start date sensitivity
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drumboy256
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Re: TxAggie's Avantis Adventure

Post by drumboy256 »

I just refactored what my actual value tilt is and it's around 82% of my portfolio. I think people freak out over what a "tilt" or "lean" "bent towards" or "lopsided" portfolio is from the traditional 3-fund because it's overweight to a market variant that is not "blend" according to MorningStar.

Also, a value portfolio globally has / is / will continue to offer risk diversification that is not tied to the US economy in a 1:1 parity. So it seems like TxAggie's adventure is not a "I told you so moment..." like most people fall into the trap of more or less a risk adjusted return that value junkie's are comfortable with that differs from the 3-funder ideals.
Promise is one thing. Fulfilling that promise is quite another. - Sir Alex Ferguson | 20% IVV / 40% IBIT / 20% IXUS / 20% VGLT + chill
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zaboomafoozarg
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Re: TxAggie's Avantis Adventure

Post by zaboomafoozarg »

I have long wanted a low-cost international SCV option. I thought about switching all my int'l SC to Avantis int'l SCV last year, but gave it a trial run with a small portion of my holdings.

Well that portion has done considerably better, as has Avantis' US SCV versus my Vanguard and iShares US SCV.

But now if I switch my holdings from Vanguard/iShares to Avantis, then it feels like I'll be selling low and buying high!

Given that, I'll probably stick with what I have and reassess in a year or two.
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hiddenpower
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Re: TxAggie's Avantis Adventure

Post by hiddenpower »

I see no problems holding avantis funds in IRAs since I can make adjustments if better products come out. But what about in the taxable account? Do any folks here have reservations or are you good with avantis? I saw that dimensional also just released more funds that are open to the public.
Nathan Drake wrote: Sun Jun 05, 2022 3:52 am A globally diversified value oriented portfolio has performed substantially better than US TSM only with far less start date sensitivity
Interesting, can you please show a resource that gives you conviction in holding international (and international value)? When looking at VTI vs VTI/VXUS mix, it seems to me that VTI usually always wins out over a long enough period, especially if you continue buying low. VXUS seems to have had moments of outperformance but the returns weren't crazy or anything.
Nathan Drake wrote: It is a long only portfolio which has a high loading on the market beta factor.
I've read that there's no meaningful difference between long value mid/large and long value small, and that the edge is when SCV has a long/short aspect. Any thoughts on this? Is there another fund one should use then with a short/long aspect built in?
One More Thing
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Re: TxAggie's Avantis Adventure

Post by One More Thing »

hiddenpower wrote: Wed Jun 15, 2022 11:09 am I see no problems holding avantis funds in IRAs since I can make adjustments if better products come out. But what about in the taxable account? Do any folks here have reservations or are you good with avantis? I saw that dimensional also just released more funds that are open to the public.
I hold AVDV, AVES, AVIV, AVLV, and AVUV in my Roth IRA. In my taxable I hold the Avantis Three Fund PortfolioTM: AVDE, AVIG, and AVUS. The former is all about pedal to the metal on factors in my tax free account. The latter is about easing off the gas. Have you considered looking into the latter three ETFs?
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