I see how adding AVUV could provide exposure to some of that. But, what if the value premium shows up only in large caps next time, or only in emerging markets? Or what if AVUV’s popularity has pumped enough money into its selection of securities it negates the potential premium? Or what if quality is actually the only factor that matters and AVUV’s superior profitability to VIOV is actually causing its relative outperformance so far?Random Walker wrote: ↑Wed Sep 28, 2022 7:53 amA couple thoughts. First, makes sense to invest in each factor proportionate to your belief in each. Second, you don’t want to own an individual fund for each factor; you don’t want one fund buying a stock and another one selling the same stock. So it’s better to buy integrated funds that incorporate multiple factors. For example there are SV funds that have profitability and momentum screens and buy/hold ranges to screen out negative momentum and take a little advantage of positive momentum.JohnFromPNW wrote: ↑Tue Sep 27, 2022 11:28 pm I guess one of the reasons I don’t have a tilt as of this moment is the practical implementation of a tilt. Sure you could add small, value, or small value. But how much small, how much value? I could pick a percent but is that the right amount?
And what about profitability, investment, momentum, and volatility? Do I need those too? And how much? And how to organize those within the traditional domestic/foreign/emerging framework? One fund for each factor both domestic and international? One fund for each factor for each cap size both domestic and international?
And if I actually buy all of them will they all just offset each other and I end up back at the total market fund?
Dave
I know (or don’t think) there are answers to those questions and adding small cap value is the most accepted means of capturing factors. Adding additional small cap to market cap weighted fund does conceptually seem more diversified, but so does adding utilities or so does equal weighting large, mid and small.