Value small cap

Hopingforthesimplelife

BananaRepublic said:

Michael121 said:

Does anyone know where i can get a value small cap etf?

From what i can tell having 10% in small cap could have increased returns by around half a percent over the last 20 years whilst also reducing risk.
 PWL-WP-Felix-Factor-Investing-with-ETFs_08-2019-Final.pdf (pwlcapital.com)
Page 20 ignore the allocation he is Canadian.
If you have seen his vids on small caps he says that having small caps in your portfolio that has growth small cap is no good, so vanguards small cap for example also has mid cap, so he said just stick with world tracker. Also notice it doesn't add a lot to the return so paying to much in costs would make it a waste of my time having one. How ever i can't find a value small cap etf anyway so was wondering if anyone has an alternative. I know past performance doesn't predict future performance but if small caps have been beating large cap on average but not so much after the last decade i would like to own some, im not really bothered about the ups and down i just want to accumulate as much as possible over the next 40 year.

I would ignore that chap. I’ve had good performance from growth small caps funds. These are OIECS but I imagine ETF’s are similar. 

Hi BananaRepublic, would you mind sharing which funds you use? I have just added a small (c.2% of portfolio) amount of vanguard global small caps but admittedly chose this out of comfort of knowing VG rather than exploring lots of other options and wondered if I could be making a better choice elsewhere. 

BananaRepublic

Hopingforthesimplelife said:

BananaRepublic said:

Michael121 said:

Does anyone know where i can get a value small cap etf?

From what i can tell having 10% in small cap could have increased returns by around half a percent over the last 20 years whilst also reducing risk.
 PWL-WP-Felix-Factor-Investing-with-ETFs_08-2019-Final.pdf (pwlcapital.com)
Page 20 ignore the allocation he is Canadian.
If you have seen his vids on small caps he says that having small caps in your portfolio that has growth small cap is no good, so vanguards small cap for example also has mid cap, so he said just stick with world tracker. Also notice it doesn't add a lot to the return so paying to much in costs would make it a waste of my time having one. How ever i can't find a value small cap etf anyway so was wondering if anyone has an alternative. I know past performance doesn't predict future performance but if small caps have been beating large cap on average but not so much after the last decade i would like to own some, im not really bothered about the ups and down i just want to accumulate as much as possible over the next 40 year.

I would ignore that chap. I’ve had good performance from growth small caps funds. These are OIECS but I imagine ETF’s are similar. 

Hi BR, would you mind sharing which funds you use? I have just added a small (c.2% of portfolio) amount of vanguard global small caps but admittedly chose this out of comfort of knowing VG rather than exploring lots of other options and wondered if I could be making a better choice elsewhere. 

You really should do your own research if you haven’t already. There are fund comparison tools at AJ Bell and Morningstar, amongst others. 2% is tiny. I tend to hold 5% per fund. However, to answer your question, these are some of my holdings: 

91 UK Smaller Companies. 
Threadneedle Euro Smaller Companies
Schroder UK Dynamic Smaller Companies
Baillie Gifford Japan Small Co
AS SICAV I Japan Smaller Co
Marlborough UK Micro Cap Growth

I’m not saying these are the best choice, but they appealed to me, and have done well for me thus far. There is a spread of performance, if only I could predict the stars in advance.

Regarding the US, my conclusion was that an index fund on large caps, such as Vanguard, was best as the main index does so well. 

Hopingforthesimplelife

Many thanks for the info although completely agree needs to be more researched from my side on these and others. Initial thoughts I like the look of the Marlborough fund 

LHW99

There is the Vanguard Global Small Cap Index fund (not ETF) available in a number of flavours

https://www.morningstar.co.uk/uk/screener/fund.aspx#?filtersSelectedValue={"term":"vanguard global small-cap index fund"}&page=1&sortField=legalName&sortOrder=asc

darkidoe

Prism said:

Michael121 said:

Prism said:

I'm not sure if value works at the moment but here is the closest to a small cap value fund in the UK
Global Targeted Value Fund (GBP, Acc.) | Dimensional

That's actually the funds he uses but they were only available to clients, he has a fund from them but does everything in one. I cant find them on i web though.

You can get it on Youinvest if that helps.
https://www.youinvest.co.uk/market-research/FUND:B2PC093?tab=3&SecurityToken=F000002J8T]99]1]FXALL$$ALL_1392&Id=F000002J8T&ClientFund=1&CurrencyId=GBP&ms-redirect-path=/1c6qh1t6k9default.aspx

Interesting that Youinvest can offer it. From the literature I read, it seemed like DFA only offers their products via Financial Advisors that they approve of and does not offer to the DIY crowd. Looks like a niche fund to cover the small and value factor at low cost. 

ChilliBob

Ii have a handful of Dimensional funds, not the one mentioned though. 

darkidoe

I gathered from another source that the DFA funds are only available via Investcentre, the AJ platform with advisory service. They probably share some resources. 

Steve182

Read this and make up your own mind about small cap growth funds being no good...      https://www.trustnet.com/factsheets/o/nfzh/fp-octopus-uk-micro-cap-growth

JohnWinder

BrockStoker said:

Volatility is only a risk in the short term. Over time, volatility becomes much less of a risk.

Maybe.

The measure of volatility, standard deviation, becomes less over time because the denominator gets bigger (n, number of time periods). But the other type of risk, how much money you lose gets bigger.

Imagine carefully investing for 40 years to accumulate £1M. Then the market, with a volatility measure (SD) of 15 falls 2 standard deviations (30%). You just blew nearly £300k. Twenty years earlier you were only going down a small fraction of that.

Linton

Thrugelmir said:

BrockStoker said:

El_Torro said:

Small caps are more volatile than a standard global index tracker.

Volatility is only a risk in the short term. Over time, volatility becomes much less of a risk.

Volatility is a measurement of one form of risk. Volatility is in effect uncertainty. When investing in equities there's never going to be total certainty. 

That is why it is essential to have an achievable objective for investing.   For one to rationally invest at all it must be assumed that investments generally increase in value  with volatility seen as the variability about the long term trend. Therefore over time you will get closer to achieving your objective despite volatility.  As this happens you can modify your portfolio to reduce the volatility.

Of course when investing in equities nothing is going to be a total certainty.  But that is true of life in general - any one of us might die tomorrow.   The key skill necessary for investment success is to be able to control those risks that can be managed so as to maximise the chance of achieving one's objectives whilst accepting that there are risks that investing cannot mitigate.