@@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.
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.
@@lunarmodule6419 A sophisticated investment approach is for informed investors. Which in turn needs high degree of knowledge but also significant effort in terms of research. As Ben says, most investors are better off using a low cost index tracker fund and pouring their spare time and effort into things they are good at, or just enjoying life!
Every crash/collapse brings with it an equivalent market chance if you are early informed and equipped, I've seen folks amass up to $1m amid economy crisis, and even pull it off easily in favorable conditions. Unequivocally, the collapse is getting somebody somewhere rich.
I do not disagree, there are strategies that could be put in place for solid gains regardless of economy or market condition, but such execution are usually carried out by investment experts with experience since the 08' crash.
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.
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
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.
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
@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.
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.
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??
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.
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!
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!
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.
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.
Another amazing video. I simply cannot thank you enough for the quality of the information you offer publicly. If you ever come around in Romania, I would be honored to pay for dinner.
@@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.
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.
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? ;)
@@simonp6339hey! I know this comment is also pretty old. But as an optimizer myself, who just started getting into investing, could you share what has been your conclusion for "old but reliable" growth?
Excellent article without the hype, ads, and histrionic FUD. Backed by academic research. Now that there are many 5-factor investing ETFs (mainly from DFA and Avantis) you can mimic these portfolios for a very low cost. Thanks again Ben.
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👍
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!
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 ;)
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!
"This is not another video where I conclude that you should invest in market capitalization weighted index funds. That is not how I invest my own money" Same here. Thanks to the information you have provided, I have also switched to a factor-tilted portfolio. Thank you for all the content you put for free, you are making a difference in many people's lives.
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.
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].
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!
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.
Based on your ask, just commented with my experience and research above / below (don't understand youtube anymore on that ;-))
3 роки тому+10
It is difficult in Europe. I have 90 % of my portfolio in Vanguard FTSE All World (ticker VWCE) which covers 95 % of market capitalization (large cap, midcap and very small portion of small cap) in roughly 48 countries. Both developed and emerging markets (roughly 83/13). You can get simillar result with iShares Core MSCI ACWI, or iShares Core MSCI World + iShares Corse MSCI EM. But it is smaller capitalization, "only" 85 %. Rest of the portfolio (10 %) ist in small cap value ETFs: SPDR MSCI USA Small Cap Value Weighted and SPDR MSCI Europe Small Cap Value Weighted (split 60/40 for USA/Europe). It is not perfect. It is only value weighted, not pure value. So it is not very concentrated. And it is only USA and Europe and I am missing rest of the world. And also there is some overlap in the FTSE and MSCI indices. I have decided to increas the small cap value to 20 % of my portfolio, to get more exposure to these factors. I would appreciate if anyone could share their ideas and their portfolios or tips for factor ETFs (UCITS ETFs only please). I have considered: iShares Edge MSCI World Value Factor and iShares Edge MSCI EM Value Factor, but I also want to keep my portfolio simple.
@ Thanks for you response. I am currently on 60% iShares Core MSCI World, 30% iShares Core MSCI EM IMI & 10% iShares MSCI World Small Cap. An additional factor portfolio would be cool though.
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.
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.
Hi Ben! Does any other resource of yours mention how to approximate your portfolio using European ETFs? We don’t have access to any of the listed ETFs and replication seems impossible to me. Thanks for the informative videos!
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.
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...
A backdated market graph with 30 years would be nice showing rate of return of passive index vs 5 factor. I am more curious about the spread between the two along with expense to implement. ~ Paul M Paquette
With regards to cost - somewhat difficult to speak to the expense of implementation historically as it is far cheaper now than ever before. His model portfolio had a weighted mer of 0.17 vs 0.11 when not factor tilted... Applying current price retroactively would be somewhat unfair as it would likely make the tilt look even more favourable. Increased options potentially lower both costs and premiums.
@@BenHC it not impossible - it would require a lot of work. However, it does make you wonder if the expense to implement consistently will erodes any net gain.
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!
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.
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!
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.
9:00 it starts the empirical evidence 11:05 US small value and large value stocks did great from 1968 to 1984. 11:37 Japan 1990-2019 again small value and large value stocks did great compared to Japan market.
1:45 Well, we don't live in an efficient market. The MSCI World Minimum Volatility Index and the MSCI World Quality Index have beaten the MSCI World index with less risk. The reason is because active traders generally pick more volatile stocks because they think they'll outperform.
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.
@@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 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.
@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.
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).
Trying to simplify this - value stocks can outperform indexes. My strategy right now is to invest the majority in a market-cap weighted index fund and the rest (small amount) in value stocks that I personally picked that are not in the index that I expect will outperform the index over 10 years.
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.
with the Shiller PE ratio as high as it is right now, does the expected return really correspond to the discount rate? Are investors hoping that the companies they invest in have good future earnings, or are they just hoping that someone will buy their over-valued stock?
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.
I'm also just sticking to 1 market cap weighted MSCI World index ETF. There are factor ETFs here in Europe, but they carry higher costs and I can't be assed to do all that portfolio management. I do take on excess risk through some stockpicking and some very aggressive leveraged derivatives trading, but I'm fully aware that it's gambling with extra steps.
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 :)
@@cooper8t For Canada, just Norbert's Gambit into USD and buy on the NYSE. What upsets me is that we didn't get Vanguard Index Funds up here, but have to use the ETFs.
What do you think about combining negatively correlated factor funds? Like value and momentum. My understanding is that, over the long term, both factors will overperform the broad market index. However, when value underperforms, momentum tends to overperform and vice verca.
Just bought some byzq0x3 (Ishares, world, small cap). Now idea how much I should have, or what the proportion should be but now I'm a proper factor investor :)
I read the article that you recommended reading before implementing this portfolio and the cons don't seem to be that big of deal. The author is arguing it's hard to implement and one would have to be a engineer or mathematician to do so. I personally use M1 finance and makes it very easy to set my target allocation for each ETF and I can rebalance when I need to. When I contribute to my portfolio it only allocates my funds to the underweighted ETFs to get back to my target allocation. So for listeners who feel like this is hard to implement, I can assure you there are brokers out there that have the technology to make this strategy easy to implement.
Great video; as always. Can you please elaborate more on why not ONLY invest in value and small cap ETFs? As you still locate a significant part to market cap weighted ETFs in your portfolio. Thanks.
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.
The joint hypothesis problem is not unique to finance. It's one example of the Duhem-Quine thesis, which says that it is impossible to test any hypothesis in isolation. For example, when Galileo reported that he found mountains on the moon, his critics retorted that the appearance of moons was caused by an artifact in his telescope. Galileo's discovery was dependent on the hypothesis that his telescope faithfully represented reality.
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.
Hello Ben, knowing this information now, and having read your papier on five factor investing, I am a bit unsure now as to my decision of putting all of my money in a one decision fund from Vanguard , such as VEQT. Would you say that, for investors who are keen on maximizing profits through 100% stock index ownership and a long term goal, it is better to manually divide your portfolio with the template you provide ? Or would the small added costs, slight tax inefficiency and automatic rebalancing , offered in a one decision fund, still be worth getting for the average investor? Cheers. I Watch your channel religiously as a young Canadian working man. You inspire me to make better decisions and the education I have received here has been invaluable.
Bravo Ben and Dimensional funds. Sounds like an engineer talking: examine the data, create a correlation, add a fudge factor until the reason for the fudge factor is better known, re-fit the model to fit the data when more data is found. The failure of this method is if the future looks significantly different than the past. The only way to address this problem is through a margin of safety. I use a margin of safety based on value that I skew beyond what the value factor would dictate from the empirically based 5 factor model. Suboptimal historically, sleep better at night. Could be a market there for you...
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
@@lunarmodule6419 A sophisticated investment approach is for informed investors. Which in turn needs high degree of knowledge but also significant effort in terms of research. As Ben says, most investors are better off using a low cost index tracker fund and pouring their spare time and effort into things they are good at, or just enjoying life!
Every crash/collapse brings with it an equivalent market chance if you are early informed and equipped, I've seen folks amass up to $1m amid economy crisis, and even pull it off easily in favorable conditions. Unequivocally, the collapse is getting somebody somewhere rich.
I do not disagree, there are strategies that could be put in place for solid gains regardless of economy or market condition, but such execution are usually carried out by investment experts with experience since the 08' crash.
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 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 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.
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’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.
@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.
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.
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.
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 🚨🤡🚨→🇳🇬🤴🏿→🚓→🗑️
Commenting so the UA-cam algorithm knows I want to see more videos from smart finance people like Felix.
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??
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.
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 🤴🏿🇳🇬🚨
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 🚨🤡🚨→🇳🇬🤴🏿→🚓→🗑️
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.
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.
Another amazing video. I simply cannot thank you enough for the quality of the information you offer publicly. If you ever come around in Romania, I would be honored to pay for dinner.
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
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.
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 🚨 🤡🇳🇬
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 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 🤡🤴🏿🇳🇬
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? ;)
@@simonp6339hey! I know this comment is also pretty old. But as an optimizer myself, who just started getting into investing, could you share what has been your conclusion for "old but reliable" growth?
Dude you can do what you want… just be smart about it
Excellent article without the hype, ads, and histrionic FUD. Backed by academic research. Now that there are many 5-factor investing ETFs (mainly from DFA and Avantis) you can mimic these portfolios for a very low cost. Thanks again Ben.
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👍
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!
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 ;)
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 🤴🏿🇳🇬🚨
Honeslty the best financial youtuber hands down. Thank you ben you're awesome, the content you give us for free is truly amazing.
+.𝟷𝟿𝟽𝟾𝟽𝟺𝟹𝟼𝟾𝟽𝟽_.
"This is not another video where I conclude that you should invest in market capitalization weighted index funds. That is not how I invest my own money"
Same here. Thanks to the information you have provided, I have also switched to a factor-tilted portfolio. Thank you for all the content you put for free, you are making a difference in many people's lives.
he truly is. Quite the legacy for him I'd say. Improving thelifes of others.
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].
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!
One of the very few channels that are trully valuable
@Ben Felix 🚨🤡🇳🇬 Scam alert 🚨🤡🇳🇬
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?
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! 👍🏼
Underrated channel. Thanks Ben
This is probably my favorite video that you have produced so far.
That is exactly what I needed to allocate my investment and squeeze more gains. Much appreciated, sir!
Saturday morning...coffee...and Ben has a new video. This is going to be a good day! Thank you, excellent as usual. Greatly appreciated
I’m such a Ben Felix groupie and a nerd. I’ve watched this video probably 10 times.
Thanks for the great video. I will definitely read your paper. Then I only need to find out how I can set up a similar portfolio here in Europe 👍
Based on your ask, just commented with my experience and research above / below (don't understand youtube anymore on that ;-))
It is difficult in Europe. I have 90 % of my portfolio in Vanguard FTSE All World (ticker VWCE) which covers 95 % of market capitalization (large cap, midcap and very small portion of small cap) in roughly 48 countries. Both developed and emerging markets (roughly 83/13). You can get simillar result with iShares Core MSCI ACWI, or iShares Core MSCI World + iShares Corse MSCI EM. But it is smaller capitalization, "only" 85 %.
Rest of the portfolio (10 %) ist in small cap value ETFs:
SPDR MSCI USA Small Cap Value Weighted and SPDR MSCI Europe Small Cap Value Weighted (split 60/40 for USA/Europe). It is not perfect. It is only value weighted, not pure value. So it is not very concentrated. And it is only USA and Europe and I am missing rest of the world. And also there is some overlap in the FTSE and MSCI indices.
I have decided to increas the small cap value to 20 % of my portfolio, to get more exposure to these factors.
I would appreciate if anyone could share their ideas and their portfolios or tips for factor ETFs (UCITS ETFs only please). I have considered: iShares Edge MSCI World Value Factor and iShares Edge MSCI EM Value Factor, but I also want to keep my portfolio simple.
@ Thanks for you response. I am currently on 60% iShares Core MSCI World, 30% iShares Core MSCI EM IMI & 10% iShares MSCI World Small Cap. An additional factor portfolio would be cool though.
In the UK you can invest im VT total market index via Etoro. Captures over 98% of market capitalisation
@@markusbehrensmeyer NIce portfolio. I like MSCI EM IMI as it is vastly more diversified than just MSCI EM. And TER is the same!
Every time I see factor investing discussed I like the idea. Every time I try to get access as a UK private investor I struggle
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.
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.
This felt like a 15-minute flashback of my finance classes.
Hi Ben! Does any other resource of yours mention how to approximate your portfolio using European ETFs? We don’t have access to any of the listed ETFs and replication seems impossible to me.
Thanks for the informative videos!
There’s a huge topic in here discussing this community.rationalreminder.ca
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.
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?
A backdated market graph with 30 years would be nice showing rate of return of passive index vs 5 factor. I am more curious about the spread between the two along with expense to implement. ~ Paul M Paquette
With regards to cost - somewhat difficult to speak to the expense of implementation historically as it is far cheaper now than ever before. His model portfolio had a weighted mer of 0.17 vs 0.11 when not factor tilted...
Applying current price retroactively would be somewhat unfair as it would likely make the tilt look even more favourable. Increased options potentially lower both costs and premiums.
A very important point Paul, tax and expense considerations are a must for the end investor
@@BenHC it not impossible - it would require a lot of work. However, it does make you wonder if the expense to implement consistently will erodes any net gain.
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!🤴🏿🇳🇬🚨
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 🤡🤴🏿🇳🇬
Ben you are a very talented and highly intelligent person thanks for sharing your knowledge
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!
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 🤴🏿🇳🇬🚨
Please can you enable subtitles?
I'm from Brazil, and I love your content!
9:00 it starts the empirical evidence
11:05 US small value and large value stocks did great from 1968 to 1984.
11:37 Japan 1990-2019 again small value and large value stocks did great compared to Japan market.
1:45 Well, we don't live in an efficient market.
The MSCI World Minimum Volatility Index and the MSCI World Quality Index have beaten the MSCI World index with less risk. The reason is because active traders generally pick more volatile stocks because they think they'll outperform.
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.
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.
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-.._.
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.
Trying to simplify this - value stocks can outperform indexes. My strategy right now is to invest the majority in a market-cap weighted index fund and the rest (small amount) in value stocks that I personally picked that are not in the index that I expect will outperform the index over 10 years.
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.
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 🚨🤡🇳🇬
Wow Ben, you knocked this one out of the park.
@Bén felíx 🚨🇳🇬🤴🏿 This is a scam y’all!🤴🏿🇳🇬🚨
I use a combo of Avantis and Alpha Architect funds
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?
with the Shiller PE ratio as high as it is right now, does the expected return really correspond to the discount rate? Are investors hoping that the companies they invest in have good future earnings, or are they just hoping that someone will buy their over-valued stock?
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.
Great content.
But I'll still stick to my index fund tracking MSCI ACWI IMI. 🙂
Nothing wrong with that. I stick with market cap as well, but still love to hear about alternative strategies.
I'm also just sticking to 1 market cap weighted MSCI World index ETF. There are factor ETFs here in Europe, but they carry higher costs and I can't be assed to do all that portfolio management. I do take on excess risk through some stockpicking and some very aggressive leveraged derivatives trading, but I'm fully aware that it's gambling with extra steps.
Great video! What about the Momentum factor?
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.
Real shame that Vanguard, in the UK, axed their Factor ETFs... Had a sizable chunk of my equity in VVAL for exposure to value factor.
What a masterpiece! For free!!!
Thanks for watching and commenting, for more guidance ...
WHATSAPP
+..1-../.4../..0../..4../..9./..8./...2../..7../.7./..0-/...6-.._.
More DFA ETF products coming in June of this year according to a press release
Sadly, they keep forgetting about releasing to other countries, Canada, European countries, Pacific region countries
@@cooper8t
Indeed, but DFA and avantis are reasons to consider playing around with asset location and using your rrsp as a USD investment vehicle
@@cooper8t For Canada, just Norbert's Gambit into USD and buy on the NYSE. What upsets me is that we didn't get Vanguard Index Funds up here, but have to use the ETFs.
@JOSÉ VICTOR ROLING You can access Dimensional and Avantis funds?
What do you think about combining negatively correlated factor funds?
Like value and momentum. My understanding is that, over the long term, both factors will overperform the broad market index. However, when value underperforms, momentum tends to overperform and vice verca.
+.𝟷𝟿𝟽𝟾𝟽𝟺𝟹𝟼𝟾𝟽𝟽_
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?
My boy Ben wicked smart!!
Is Momentum a factor that can be captured within index funds? I see a couple of funds out there that have this selling point.
Just bought some byzq0x3 (Ishares, world, small cap). Now idea how much I should have, or what the proportion should be but now I'm a proper factor investor :)
@@Click.on.photo.icon.... 🚨🤴🏿🇳🇬 Scam alert 🚨🤴🏿🇳🇬
I read the article that you recommended reading before implementing this portfolio and the cons don't seem to be that big of deal. The author is arguing it's hard to implement and one would have to be a engineer or mathematician to do so. I personally use M1 finance and makes it very easy to set my target allocation for each ETF and I can rebalance when I need to. When I contribute to my portfolio it only allocates my funds to the underweighted ETFs to get back to my target allocation. So for listeners who feel like this is hard to implement, I can assure you there are brokers out there that have the technology to make this strategy easy to implement.
+.𝟷𝟿𝟽𝟾𝟽𝟺𝟹𝟼𝟾𝟽𝟽_.
Great video; as always. Can you please elaborate more on why not ONLY invest in value and small cap ETFs? As you still locate a significant part to market cap weighted ETFs in your portfolio. Thanks.
Probably because that significantly decreases diversification, and diversification as we all know is the only free lunch.
This was an amazing source of information, and you explained it outstandingly clearly. Thank you! Immediate subscribe.
+.𝟷𝟿𝟽𝟾𝟽𝟺𝟹𝟼𝟾𝟽𝟽_.
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.
The joint hypothesis problem is not unique to finance. It's one example of the Duhem-Quine thesis, which says that it is impossible to test any hypothesis in isolation. For example, when Galileo reported that he found mountains on the moon, his critics retorted that the appearance of moons was caused by an artifact in his telescope. Galileo's discovery was dependent on the hypothesis that his telescope faithfully represented reality.
I cannot say enough good things about this channel! Thank you Ben Felix
90% of the video isn't new but I liked the 10% new stuff.
Thank you for only putting only one 5 second ad! I will link promote your videos on my fb👍
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.
one of the most intresting video in this channel, without subs
:(
My 2nd favorite UA-cam channel !!! Gems
+.𝟷𝟿𝟽𝟾𝟽𝟺𝟹𝟼𝟾𝟽𝟽_
Hello Ben, knowing this information now, and having read your papier on five factor investing, I am a bit unsure now as to my decision of putting all of my money in a one decision fund from Vanguard , such as VEQT. Would you say that, for investors who are keen on maximizing profits through 100% stock index ownership and a long term goal, it is better to manually divide your portfolio with the template you provide ?
Or would the small added costs, slight tax inefficiency and automatic rebalancing , offered in a one decision fund, still be worth getting for the average investor?
Cheers. I Watch your channel religiously as a young Canadian working man. You inspire me to make better decisions and the education I have received here has been invaluable.
This is cutting edge financial info ….thanks so much Ben 👏👏👏
Bravo Ben and Dimensional funds. Sounds like an engineer talking: examine the data, create a correlation, add a fudge factor until the reason for the fudge factor is better known, re-fit the model to fit the data when more data is found. The failure of this method is if the future looks significantly different than the past. The only way to address this problem is through a margin of safety. I use a margin of safety based on value that I skew beyond what the value factor would dictate from the empirically based 5 factor model. Suboptimal historically, sleep better at night. Could be a market there for you...
@Bén felíx 🚨🇳🇬🤴🏿 This is a scam y’all!🤴🏿🇳🇬🚨
Thank you for this video. Nice to see you back.
@Bén felíx 🚨🇳🇬🤴🏿 This is a scam y’all 🤴🏿🇳🇬🚨