Five Factor Investing with ETFs
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- Опубліковано 12 тра 2024
- Meet with PWL Capital: calendly.com/d/3vm-t2j-h3p
Before attempting to implement these portfolios, please read this: Why It Would Be Ludicrous To Invest In These Model Portfolios boomerandecho.com/why-it-woul...
Larger companies like Apple and Tesla make up a larger portion of the market compared to smaller companies, and these relative weights are reflected in a market capitalization weighted index fund. Letting the market dictate your portfolio weights has lots of advantages, but pushing the fundamental logic behind index investing one step further leads to the potential for significant improvements in portfolio construction.
Referenced in this video:
Five Factor Investing with ETFs: www.pwlcapital.com/resources/...
The relationship between return and market value of common stock: www.sciencedirect.com/science...
A Five-Factor Asset Pricing Model: papers.ssrn.com/sol3/papers.c...
Timestamps:
0:00 Market Capitalization Weighted Index Fund Explained
1:00 The Efficient Market Hypothesis
3:25 Let’s Get Back to Basics
4:51 Capital Asset Pricing Model (CAPM)
6:40 Empirical Anomalies in the Market
8:56 Risk Premiums
12:30 What I do with my Own Money
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Be aware of spam comments and replies. I will never ask you to text, email or call me in a UA-cam comment. Please report those comments.
Those are such a plague, lol (well, not really loling..)!
Insane spam on all the financial channels. It's nuts. UA-cam needs to do something about it.
Dude, so that wasn't you who I was talking to last night? I will check with my bank to see if I can reverse the money transfer.
@@mspaic10 I hope that’s a joke...
WHERE ARE THE SUBTITLES IN THE VIDEO SO I CAN TRANSLATE IN MY LANGUAGE AND UNDERSTAND!!??
😣😣😫😫
A financial social influencer that doesn't promote webull every two seconds...amazing.
@@tusharprasad2734 the video assumes the average investor uses something like VT (VEQT in canada). Globally diversified across geography, sector, company size etc. If they are in a concentrated portfolio of US large cap stocks they should probably diversify before considering a factor tilt like the video proposes.
But but but, my free stock! It could be worth up to $1,000!!! How could I pass that up???
@@tusharprasad2734 there’s no such thing as a total market ETF that doesn’t invest in small/med cap companies.
Webull UA-cam ad in 3...2...1...
He doesn't even promote PWL Capital. They work with high net worth individuals (ie not UA-cam watchers).
Ben - Read my paper to understand this more.
Me: *About to adjust my entire retirement strategy with a few clicks without doing any additional research* Good idea. Thanks Ben.
Lmfao same tho
Did you read the paper? Most of the video went over my head, could you ELI5?
@@tanishsingh5260 to ELY5: historically, small cap value factors have provided greater returns than than any other asset class.
@@naidnarnya9448 In GoTrade, that is the equivalent to AVDV ETF tho
Most rookies look for a click bait “shocked face” video by some 19 year old that doesn’t have a clue. Ben is the real deal.
Haha those shocked face thumbnails are so ridiculous!
Ben is interesting, but let's keep a critical mind ;-) Maybe the formula he's flashing is another type of red herring.
@@lunarmodule6419Ben provides the sources to back up all his claims. He’s not just talking out of his ass
You know, fools spouting opinions about things they know nothing about are a dime a dozen. We call em Motley Fool. I always love how you back your conclusions with evidence that anyone can go out there and read for themselves and challenge, and sometimes I read that same evidence myself. Cheers for being a beacon of knowledge in a sea of horseshit
Motley Fool is a dumpster fire. The financial media in general is utterly cringeworthy.
UBS and Credit Susie are literally doing the same thing but wearing business suits, and Swiss passports.
@@aethelwolfe3539 I don't get credit Suisse or UBS ads shoved in my face preying on the poor, so good luck to them both
It’s great to watch a video without ads every 2 minutes
Worth it
@@tusharprasad2734 you planning on replying to every comment saying this?
@@tusharprasad2734 stop spamming.
Hi Ben! When you wrote this white paper back in December, I studied it very closely and decided to follow this allocation in my RRSP. I can't thank you enough for including a section on page 25 (Proposed Equity Model Portfolio) for tax efficiency in an RRSP. Without your hard work, this information would not be available to investors like me. This channel is a blessing for Canadian Investors. Cheers from BC!
TBH, I don't understand that part. You don't have to pay taxes on money inside an RRSP, so why does it matter if the funds are from US or Canada? (Background: the paper lists some US equivalents for CDN funds, saying that this is more tax efficient in an RRSP.)
@@1Blackstaffer it’s probably about withholding taxes imposed by America on American stocks and dividends. And America taxes Canadian RRSP’s differently than personal investment accounts.
Where can i get this paper?
@@nelsonenegbuma6033 it’s linked in this videos description
@@vancouverbill thanks man! I saw it
You’re just such an OG Ben. Been watching you for years. Been waiting for this video for years. Cheers bro. Appreciate your work a lot. Thank you for sharing your experience with us on UA-cam.
Underrated channel. Thanks Ben
Im just getting into investing. I've always loved science, I never realized you could be scientific with investing. Thanks for your hard work Ben, it's life changing
It does not get more researched and rational than you Ben. Its not just your empirical approach. I won’t lie your straight to camera delivery and forthright presence just enforce a certain feeling of honesty and integrity that many others who offer ‘advice’ on the same topics and on the same medium don’t go near matching. Bravo keep it up. Your videos are always thought provoking. And I always take something away from them. If that’s your goal your right on target.
Sir, you are a treasure to this community. I still have questions, especially considering reasonable prices for this exposure with the current ETFs available in Europe, but you video sums up about 8 weeks of research for me. The average TER of such factor ETFs is rather high, and these costs are a given compared to the expected average return premium. It's a weird, but familiar feeling to dive this deep into economics as a computer scientist, feels like data mining all over again. You really helped me a lot, simply because you sum up my own conclusions devoid of the noise to the right and left of the path. Thank you very much.
Saturday morning...coffee...and Ben has a new video. This is going to be a good day! Thank you, excellent as usual. Greatly appreciated
Hi Ben, my introduction to investing two years ago was to Vanguard's market cap weighted index funds. I really like the way you present yourself and feel like I'm going to need a month to digest this information. I'm planning on printing your paper today and keeping it in the work truck to read on my lunch breaks! Thank you for everything you are sharing!
Ben, you are the best. I don't know if you know this, but you are helping a lot of investors from all around the world (I'm Brazilian, btw). Thanks a lot! Keep up the great work!
This is probably my favorite video that you have produced so far.
This is stellar, I was literally just having a bit of a binge through your previous videos, and this new video appeared as I refreshed at the end. This info couldn't have come at a better time, as I've recently been a bit overwhelmed with wanting to reorganise my allocation. I'm not hugely experienced but it's very difficult to discern good advice from bad when it comes to this stuff. Excellent info, and all impeccably referenced. A huge breath of fresh air!
@Ben Felix 🚨🇳🇬🤴🏿 This is a scam y’all 🤴🏿🇳🇬🚨
Thank you for making an updated version of the amazing 2019 video ("Small Cap and Value Stocks") that summarizes the relevant theory while introducing the concept of factors. I've been compiling a short list of your videos that I'd share with friends & family that are interested in learning how to invest (and also more generally plan for retirement and manage wealth), and this one is a great summary for the investment portion. And as you have mentioned many times, I'll still end up recommending only something similar to VT, which is sub-optimal, but easier to manage. That is, until we have an equally easy, single-ticket ETF with factor diversification. DFA and Avantis are looking promising.
Either way, understanding about factors (even when not tilting towards them) greatly helps in showing people how trying to pick individual stocks is a losers' game.
Your videos should be considered digital heritage. Thanks for all your work and PWL for supporting it.
I always have a sense of being much more grounded after watching your content. Appreciated
@@Click.on.photo.icon.... how’s the weather in Lagos, Nigeria this morning?? Another fine day for scamming, huh?
Thanks a lot Felix! Your educational content is highly valuable.
I hope your content gets more visible by the day so that more people can invest with 'Common sense'. Thanks again Felix and looking forward to more great content.
Great video Ben! Love the evidence-based approach on this channel 👍
Another great video Ben! Always clear and concise!
Watched this after reading "Trillions". Great explanation! I am going to implement the portfolio you outlined in your paper... Thank you so much for this incredibly valuable information!
I've been watching and re-watching the same videos from you. I feel like even though they're 15 minutes there's so much information in them. The size & value factors are probably one of the most interesting studies I've ever heard of in my time in the industry!! Love your videos and keep up the great work Ben!
@@Click.on.photo.icon.... 🚨🤡🚨 SCAM ALERT 🚨🤡🚨→🇳🇬🤴🏿→🚓→🗑️
Amazing stuff man! We don't even have such ETFs here in India. Although I can only invest in low cost index funds, I still watch you're content just to gain some other worldly knowledge!
Kudos to your efforts Ben👍
Ben is, as always a genius. I just have one question. WHY DOESN'T HE EVER BLINK!
Why you bring that up??? Now I'm staring at the man eyes...and counting.
It's too inefficient to blink.
Because Aliens never do
If I had a CFP, CFA, MBA, wife, kids, and I was a portfolio manager I wouldn't have time to blink either.
@@AntBTun I think Ben has an engineer background as well, maybe a bachelor or something in engineering.
This is the video we've all been waiting for!
@Ben Felix Hey there! How’s the weather in Lagos Nigeria right now? You seem to enjoy scamming, don’t you?
Hey Ben, love your content. You are starting to get a following here in Mexico, i've seen more and more people recommending your videos. Keep up the good work :)
@@thetecshow8104 We meet again, bot Ben, lost evil twin of real Ben.
Dude you're absolutely awesome. Like for real. Thanks for everything you do. Your effort really helps understand these rather complicated topics and it improves life quality of whoever is watching as a result of it. Also the videos are very entertaining to me and I love your no nonesense approach while staring at me out of that grey void with the ocasional well picked graphs and animations. Greetings from Germany to you and your family. Please keep up the good work.
@Ben Felix Hey there, Bot Ben! How’s the weather in Lagos Nigeria right now? You live to scam, don’t you?
@Ben Felix 🚨🤡🚨 SCAM ALERT 🚨🤡🚨→🇳🇬🤴🏿→🚓→🗑️
Another video full of well-researched wisdom and insights. Thank you Ben 🙏🏼
@Bén felíx 🚨🇳🇬🤴🏿 This is a scam y’all 🤴🏿🇳🇬🚨
Appreciate the content once again! Genuine wealth of information and knowledge!
I cannot say enough good things about this channel! Thank you Ben Felix
This is cutting edge financial info ….thanks so much Ben 👏👏👏
Awesome video! Good source of knowledge for common investors! Cheers Ben!
This advice, when you presented it in your earlier videos and in your podcast, was the basis of how I structured my newly opened retirement account. I feel very confident it what I invested in because of your videos. I wish there were more creators who put this much careful thought and research into their content.
@Ben Felix 🚨🤡🇳🇬 Scam alert 🚨 🤡🇳🇬
Thank you for this video. Nice to see you back.
@Bén felíx 🚨🇳🇬🤴🏿 This is a scam y’all 🤴🏿🇳🇬🚨
That is exactly what I needed to allocate my investment and squeeze more gains. Much appreciated, sir!
Amazing job! Thanks for sharing so much knowledge. Hands down the best finance influencer these days! Please do keep it up.
@@thetecshow8104 hey there! How’s the weather in Lagos Nigeria right now? You live to scam, don’t you?
One of the very few channels that are trully valuable
@Ben Felix 🚨🤡🇳🇬 Scam alert 🚨🤡🇳🇬
Another banger from Ben! Off to read the paper now.
Commenting so the UA-cam algorithm knows I want to see more videos from smart finance people like Felix.
Ben you are a very talented and highly intelligent person thanks for sharing your knowledge
I'm learning the difference between investing and speculation, Ben here is on the investing side, a very good sign, he doesn't mention prices ever.
The premium UA-cam financial content. Can't believe I get such quality content for free. Thank you Ben 🙏
What a time to be alive.
Thanks Ben, top quality content as usual. Nothing on youtube comes even close to knowledge you dispense. Now what I need is leveraged AVDV and AVUV funds... :)
@Ben Felix 🤡🤴🏿🇳🇬 Scam alert 🤡🤴🏿🇳🇬
Honeslty the best financial youtuber hands down. Thank you ben you're awesome, the content you give us for free is truly amazing.
+.𝟷𝟿𝟽𝟾𝟽𝟺𝟹𝟼𝟾𝟽𝟽_.
@Ben Felix looks like Dimensional released multiple ETFs around factor investing since this video was published. Would appreciate an update on model portfolio construction based on those ETFs.
Another excellent video, and one I’ve been waiting for
Killing it as always. Love starting my weekend with a Ben Felix video.
@Ben Felix 🚨🤡🇳🇬 Scam alert 🚨🤡🇳🇬
Thank you for only putting only one 5 second ad! I will link promote your videos on my fb👍
This was an amazing source of information, and you explained it outstandingly clearly. Thank you! Immediate subscribe.
+.𝟷𝟿𝟽𝟾𝟽𝟺𝟹𝟼𝟾𝟽𝟽_.
Finally we are starting to see some products available for individual investors. I’ve known about these factors for a long time (did a reading deep dive back around 2006) but there were few vehicles available. DFA is great, but really only accessible to those working with an advisor and often limited to those with a large portfolio.
One thing I would add is that if you add these factors you must be willing to tolerate returns that can differ on a year to year basis significantly from a market cap weighted portfolio.
DFA made some ETFs that are available to all. Correct me if I'm wrong. Also, you are completely right about the risks. I too often see people go into value cause its more "stable" and they expect lower returns... But i also have to ask you: how did you know about the factors in 2006??
Amazing video, as always.
It's not your average youtuber that can make me actually go read something for a change but I'd be a fool not to check out your paper after this vid
Right!
Exactly what I'm doing right now!! Im a new investor and I'm glad I found Ben!!
@@tusharprasad2734
Sure but if you read enough about the topic you'll learn that the size premium is most accentuated within value stocks and that small cap growth is a bit of a waste... So an index that doesn't sort for value misses some of the benefit.
This is why the recommended funds AVUV and AVDV mentioned in his paper are small cap value funds, not just small cap.
@@tusharprasad2734 stop spamming dude
@@BenHC Well said. I couldn't have explained it better.
Perfect vid at the right time for me as I've been looking at these tilts recently.
Unfortunately I'm having difficulty finding global small cap value funds. At least, ones available here in the UK.
Keep it up Ben!
Same, I'm just thinking vanguard's global all cap will be a good one fund solution, I do believe they have a small cap fund if you're interested, but no etf
Yup, this is the problem, very little available in Europe. Even the Avantis US funds are unfavorable in my country's tax law, and aren't traded at local exchanges, and trading at a US exchange has high order costs.
Ben, you are a gem! Videos like this are real gold. It's like I'm in a great financial university but for free.
@Bén felíx 🚨🇳🇬🤴🏿 This is a scam y’all 🤴🏿🇳🇬🚨
@Bén felíx Just give it up dude. You and I know you’re in Lagos, Nigeria right now. Life is tough there, I know, but trying to circumvent that by stealing people’s hard-earned money is just terrible.
Excellent again, Ben!
Wow!!! This is what I am talking about. That's a serious video, bravo
Ben, thanks. Amazing job. I love this channel. We* do.
@Ben Felix 🚨🇳🇬🤴🏿 This is a scam y’all 🤴🏿🇳🇬🚨
I love how you always present the scientific sources to back up your claims and how easily you explain topics. I have a suggestion for one topic that you could cover in future videos: (multi-factor) ETF portfolio rebalancing. What is the most optimal rebalancing frequency with regards to returns assuming no rebalancing costs incurred. Thank You!
@Bén felíx 🚨🇳🇬🤴🏿 This is a scam y’all 🤴🏿🇳🇬🚨
Amazing. Thanks a lot. I hope a small cap value UCITS ETF is launched shortly.
Great series of videos Ben. Don't stop! Informative and logically presented.
So interesting to finally hear what you do with your own money! Thanks!
Thanks for watching and commenting, for more guidance ...
WHATSAPP
+..1-../.4../..0../..4../..9./..8./...2../..7../.7./..0-/...6-.._.
Wonderful video Ben, thankyou. Unfortunately, here in Australia there are still very limited opportunities for targeting factors using ETFs. There are several ETFs targeting small caps (both domestic and international) but that's about it. DFA has no ETFs down here and they have a minimum 500k investment requirement for their off-market funds, which puts them a bit out of my reach, at least for the time being :/
Thanks Ben!
I tossed a 5% value tilt in my portfolio since listening to your podcast and have been very pleased :D Will likely stop there hahaha
@@Click.on.photo.icon.... 🚨🤡🇳🇬 Scam alert 🚨🤡🇳🇬
This is good stuff. Excellent!
Excellent stuff. Thank you.
This felt like a 15-minute flashback of my finance classes.
This is the goldmine investors need to see. Great job Ben! Now we just need to see a video and sample allocation for those with a lower risk tolerance and/or shorter time horizon.
As a retiree, I second that.
Excellent video (and an even better paper)!!! Liked and subscribed.
+.𝟷𝟿𝟽𝟾𝟽𝟺𝟹𝟼𝟾𝟽𝟽
Wow you're good. Wish I had professors like you in finance, I had to do a lot of research myself to improve my knowledge in the field, and your channel feels like the papers and books I referenced in college. I'll gladly read your paper, the promised outcome is very appealing but I am concerned the fees will eat all the margin compared to the ETFs I use where I only pay taxes when I make profits and every other fee is basically non existent. I will happily play with the theory again!
@Bén felíx 🚨🇳🇬🤴🏿 This is a scam y’all!🤴🏿🇳🇬🚨
An island of common sense in an ocean of tinfoil hats.
100% education and information. Never trying to sell you something with ridiculous metrics based off of feelings and sentiment.
Tinfoil hats are a 5G investment!
Name another person referencing ssrn articles and talking about investing. Probably only a handful out there
The man has an article outlining why you might not want to do this in the description. The transparency is awesome.
@@Click.on.photo.icon.... 🤡🤴🏿🇳🇬 Scam alert 🤡🤴🏿🇳🇬
Thanks Ben for this great video. Somehow this one does not have CC enabled. I teach in Spanish and some of my students will greatly appreciate the CC feature. If you could enable them they will be very happy!! Keep up the great work (and also the podcats!!). Best wishes
I work at a bank that only sells actively managed portfolios. Whenever we are in a team meeting being 'upskilled' on the virtues of active management, ben felix videos are playing in my head with the DOOM soundtrack playing in the background.
@@Click.on.photo.icon.... 🤡🤴🏿🇳🇬 Scam alert 🤡🤴🏿🇳🇬
Quality video as always.
I appreciate your videos so much!!! Thank you!
Y'know, I totally agree with you that market cap index etfs are probably best for most investors, and were best for me at the very start of my investment journey, because they reduce the complexity of managing a portfolio. But I just wanna add some of my own POV as someone who at this point would be happy to move on to something more advanced even if it adds more complexity.
As a data scientist who genuinely enjoys this sort of thing but is relatively new to investing (
That really is the trade-off: Simplicity v optimization. Index funds are simple esp with simple auto re-balancing funds like Vanguard Life Strategy or Target Date funds. I don't know of any similar widely available factor-slanted funds. So factor slants require a little more complexity and maintenance. So if you don't want to focus much on investing single, simple auto re-balancing funds are probably the best option. If you want potential for slightly higher returns and don't mind more complexity factor-slants are something to consider.
I know this is an old comment, but I've had a similar struggle of always trying to optimize more and have more fun by discovering new things in finance, which unfortunately often mostly ends up in the boring answer of index investing, but I think at some point we have to accept that there is little left to optimize, and maybe we should just let our investing be mostly boring, and have fun optimizing and discovering in other fields of life.
Yes, factors are interesting, but it's also not going to take that much time to include in the portfolio, if it's worth spending all the time on at all (which apparently Ben himself said he wouldn't do if he didn't have access to DFA funds, and just settle for simple index funds).
So in short... maybe let investing be mostly boring, and tweak something else like... learn Japanese or program an awesome project? ;)
Please can you enable subtitles?
I'm from Brazil, and I love your content!
Hi Ben, super awesome and detailed videos. I really appreciate the high level of research you are bringing in to investing. That being said, it would be really great if you could break down the main conclusions at the end of every video, and give them in simple terms, or talk about the implications for the average investor in a little more detail (e.g. propose how one could change the weights in their portfolios to incorporate this information).
Will do. I haven’t made a new video in a while but plan to get back to it.
It is still important to emphasize that there is no free lunch and you are taking on more risk when you buy AVUV instead of VTI, and it really just depends on if you can tolerate that chance of under-performing the market for a decade or so. And that really depends on your personal situation and lifestyle more than anything, along with your soundness of financial plan to consider the fact that you may have low returns without the type of government and societal intervention that goes with the overall market slumping.
I have concerns that especially those with experience handing ups and downs of different factors may overplay the benefits of expected returns while underselling the reality of risk in general, which can be a bit dishonest even if it is a white lie.
How do we know that these risk factors will persist? With the explosion of the internet, research tools, and instant availability of data that can be accessed by the individual investor, how can we be certain that the small/value premium won’t be arbitraged away?
Thanks for the excellent well-researched thought-provoking video as usual Ben!
According to another portfolio researcher, factors slightly diminish after publication, but mostly persist. They might simply be an additional risk premium, in addition to the market risk. I've written this comment in more detail elsewhere so I won't elaborate, I'm sure you'll find articles on this ;)
Finally we get to have a bit of fun around here.
I really like these videos, however, since I am not in finance, I have to watch them 2-3 times to really get the message.
I would love a "softer" explanation at the end so that noobs like me can get the general idea ;)
Keep up the good work Ben, I already printed the paper to read it
@Matthew Ryan did a pretty good job above in the comments somewhere but I'll give it a shot. Basically, active management has been shown not to reliably outperform the general upward drift of the market itself, even the managers that do outperform don't have repeat success year after year. So the basics of rational investing is to invest in total market index funds (with very low fees, filled with stocks in relative proportion to their share of the market) which on its own is a pretty solid approach and very easy to accomplish with ETFs. Then, to increase expected return by gaining exposure to the five factors ben is discussing. To do this, the sensible approach (or easiest anyway) is to find a combination of purpose built ETFs to invest in, e.g. adding small cap value ETFs for the US market, world market and for your home country as applicable. At this time, finding a decent small cap value ETF for e.g. Canada is problematic, but Ben has generously put together model portfolios that do a good job at approximating an ideal portfolio to match this approach and gain as much exposure to the 5 factors as possible while also minimizing fees, being reasonably tax efficient, etc. It's a balancing act, but the expectation based on the available evidence is that over the long term this portfolio will at least modestly outperform the market, and be more reliable in doing so due to its multi-factor diversity.
@@brokesy3515 thank you! 👍🏼
Such valuable info!
It's disappointing that in Europe we don't even have an International Small Cap Value ETF. We do have a liquid Small Cap ETF from iShares, but that includes Growth Small Cap, and we know that they drive down the net return of the whole asset class.
We also have 2 Small Cap Value ETF's from SPDR for USA and Europe, but the size of those funds are so small that investors risk the closure of those ETFs...
Guess I'll stick with my cap weighted FTSE All-World ETF from Vanguard from now...
Lots of discussion on that here community.rationalreminder.ca/t/search-for-an-ideal-ucits-factor-portfolio/3340
If you can’t click the link it’s because you need to sign up
Is the forum invite-only?
Thanks for another great video!
Now, the only struggle that reminds is the DIY implementation, as European market hasn't developed too many cheap ways to implement these.
Lots of discussion on that here community.rationalreminder.ca/t/search-for-an-ideal-ucits-factor-portfolio/3340
@@BenFelixCSI I'm familiar on that thread and have been active for few messages, but the implementation for DYIers are still not as easy as they seem to be other side of the pond :)
Thanks for great forum also!
@@BenFelixCSI Great video. Thanks Ben
@@BenFelixCSI and others, what I meant by the just "materialized" yesterday. The liquidity of the ETFs mentioned in that thread is really poor. Two ETFs that I tried (and succeeded) to buy yesterday has daily trading of ~60keur per day. Average trading day for few of those is just few thousand units per day.
The Ben Felix masterpiece video that puts it all together. Ben, your 5-factor ETF Model Portfolio has a relatively small factor tilt (AVUV-10%, AVDV-6%). I would be curious to see backtested performance data when varying the tilt. Please note that this tilt is much less than the portfolio as proposed by Daniel Solin in his 2011 book, "The Smartest Portfolio You'll Ever Own", that I have adapted. I do realize that you are balancing many considerations (e.g., complexity). However seeing more data with just variations of your 5-factor model would be fascinating.
I'm sure you probably say it somewhere (or write it the paper - has been a while I've read it!), but one thing to keep in mind with the model 5-factor portfolio you propose is that is uses some US ETFs (AVUV for Small Cap Value, AVDV for International Small Cap Value), so you have to buy in US dollar which for a DIY comes with an extra cost (or complexity if using a strategy like Norbert's Gambit). As you point out in that same paper (or the previous video about 5-factor), is that some "factor" ETFs not only have much higher fees, but fail to capture their factor(s) effectively. But I guess I should revisit it if the risk-adjusted performance is significantly better makes it worth the hassle, especially in a RRSP where holding US Assets is fiscally advantageous.
Section 7 of his paper addresses tax efficiency and RRSP
@@GiantAnteatersRkool Knew he wouldn't have overlooked it. Complexity "cost" is subjective however :)
How is holding US Assets in an RRSP fiscally advantageous? I understand why holding them in an RRSP vs NOT in an RRSP is advantageous. I don't understand why holding US stocks in an RRSP is an advantage over holding Canadian stocks in an RRSP.
@@1Blackstaffer Internet correct me if I'm wrong, but from what I remember, in a nutshell the US and Canada have an agreement to wave the withholding taxes of the US holdings in RRSPs of Canadian citizens and reciprocally the Canadian holdings in US tax deferred equivalent (401(K), maybe others?) of US citizens. But it only works if you hold US assets in a USD [EDIT: RRSP account, not sure it has to be in a USD account, but I think you have to trade in a USD account to purchase US securities in most banks - not something I'm experienced with though].
Some great info as always. Very interesting paper and video. Any change of doing a US list of ETFs for this?
First, awesome video as always!
It is possible to buy Dimensional`s ETFs now (DFAU, DFAI, DFAE). Would it make sense to make a portfolio using only these ETFs to be exposed to 5 factor investing?
IMO, your best video so far, and that says a lot given how consistently fantastic your helpful videos are. Any opinions on for US small cap value portion, equal weighting AVUV and RZV?
@Bén felíx 🚨🇳🇬🤴🏿 This is a scam y’all 🤴🏿🇳🇬🚨
Ben, when can we expect you to work with someone to build a fund based on your research? I want an easy way to invest in this model.
Keep up the great work. Your videos, more than any other source, are the reason I've become so excited about investing.
@Bén felíx 🚨🇳🇬🤴🏿 This is a scam y’all 🤴🏿🇳🇬🚨
Great research. Once discovered, more investors tilt their portfolios to capture the premiums. Does this mean they will mean revert? I don't know. I've decided to keep my portfolio simple and not chase these other premiums which may diminish. Plus the expense ratios on these other funds are higher, which takes away some of the premium.
This is the video that led me down the rabbit hole. Thanks 😁
Is that a good thing?
@@alankoslowski9473 yes
My boy Ben wicked smart!!
Hi Ben !
Thanks for a great video. I was wondering if investing in ETFs like XCNS, XBAL, XGRO, XEQT depending on your risk profile is a better option altogether instead of investing in blue chip companies stocks and high dividend ETFs for income?
This is an old video, but it nicely discusses this important topic.
One issue is that 401 retirement accounts almost never allow ETFs. Even my company's retirement account--which is superb--doesn't allow them. So, I implement a three-factor model, which can be done with mutual funds.
Ben, great video!
Quick question: Which ETF will you choose between IJS vs AVUV and why? I see IJS has lower fees and follows a passive strategy whereas AVUV has a bit higher fees and is an actively managed ETF. Is there a reason why AVUV is in the model portfolio, not IJS or VBR? Thank you!
Thanks for another great video, Ben! I've been using a factor-tilted strategy since I read your 2019 paper and I'm curious how much of a difference you think the new Avantis ETFs make compared to the iShares ETFs mentioned in the previous paper. From what I read in the new paper, it sounds like the Avantis add additional exposure to profitability and investment that the iShares ETFs didn't. So my question is how big might we expect the impact to be of incorporating these two additional factors into the tilt? Thanks again!
@Bén felíx 🚨🇳🇬🤴🏿 This is a scam y’all 🤴🏿🇳🇬🚨
I am reading your paper for sure. Too bad we (still) do not have a lot of ETF options here in Brazil, but this market is growing - although slowly. We do have a small caps ETF, but it is historically highly correlated to the market cap, broad market ETFs.