1Yr·

MSCI Factor ETF comparison

According to MSCI, the Momentum and Quality ETFs perform better than the World ETF. The positions are smaller and more concentrated than in the World ETF.

A world option for you?

What do you think?

Since I don't own an ETF and otherwise hold quality stocks, I can well imagine a momentum ETF as an addition.

But I'm not sure whether I would choose one of the ETFs if I only had to bet on a single ETF.

20 Comments

GeldmitKopf@cashwithhead

1Yr

If so, I would take the Quality. The momentum more or less always follows the trend, whereas the quality simply picks out good stocks that can bring promising performance

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DerDanner@Therapeut

1Yr

@cashwithhead My stock selection is similar to Quality.
If you were to add an ETF, would it be an AllWorld or World?
I have the idea of letting it run until I retire.
Am I missing out on returns with the Allworld? Would Momentum be too much risk for that?

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GeldmitKopf@cashwithhead

1Yr

@Therapeut you have to ask yourself whether you think the EM has a future, if not then the World.
Then you have to ask yourself whether you want to have a filter and whether the trend should be driven or data-driven. The Momentum's biggest risk is if the trend grows quickly then it only lags behind. If the trend goes over a longer period of time it is the better factor

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Na D.@user24280df1bf3d4d22

1Yr

Over a long time scale, no one factor applied to a market cap weighted index can beat the underlying market cap weighted index. If it did, the underlying index would eventually start to mimic that factor index. You can have outperformance in short run based on the valuations, economy conditions etc.

But nothing wrong in picking one or more factors you like and investing in them.

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Gerit@Gerit

1Yr

This would also be interesting to observe in other market phases, not just in a zero interest rate bull run 😅

Edit: but thanks for the preparation! So much effort must be appreciated here 🙏🏻

What I have noticed so far over the past few years is that classic value investing simply works best over long periods of time.

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DerDanner@Therapeut

1Yr

@Gerit Since I am very concentrated in quality stocks, would you prefer to invest in an Allworld or World?

I have the idea of mainly running an ETF later on to buy shares in certain situations.

With the Allworld, I am broadly positioned but would have less return than with the World? And the Quality/Momentum/Value would be better than the World. Mhmm😂

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Gerit@Gerit

1Yr

@Therapeut if you invest in a very concentrated way and things are going reasonably well, you are constantly improving and can then somehow look back over 4-7 years with a decent performance, I see no benefit in an ETF.

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Waldo@Waldo

1Yr

Whereas the quality index might perform better, the connected etfs usually have a much higher cost, resulting in lower overall gains, at least that was my analysis outcome early last year.

The momentum index I held for a while but as you can also see from the data, it's performance is not consistent. I struggle to understand how and when best to use it, so I sold.

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Schnoto@Schnoto

1Yr

Take a look at $IQSD. It is a multi-factor ETF that has performed very well so far and is very suitable as a supplement.

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DerDanner@Therapeut

1Yr

@Schnoto Is it running in your depot?

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Schnoto@Schnoto

1Yr

@Therapeut Has been in my portfolio since the beginning of February. The composition and "historical development" convinced me.

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DerMartin@DerMartin

1Yr

I would weight the top 3 equally and balance them with savings plans.

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Paketknecht@Paketknecht

1Yr

You have made a mistake in the factsheets, the $IWVL does not track the MSCI World Value but the MSCI World Enhanced Value.

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DerDanner@Therapeut

1Yr

@Paketknecht thanks ups

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DerDanner@Therapeut

1Yr

@Paketknecht just looked up the ISIN matches, looked it up at Ishares
IE00BP3QZB59
This is the Value, then the name at getquin is not correct.

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Paketknecht@Paketknecht

1Yr

@Therapeut That's all true, but the screenshot you have attached here is of the MSCI World Value, but there is no ETF of it. All the value factor ETFs track the Enhanced Value Index, which is a different index.

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SP@spellwan

1Yr

I can't get my head around the differences between ETFs. Can anyone recommend me a book or channel on YT.

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DerDanner@Therapeut

1Yr

@spelvan What don't you understand?

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SP@spellwan

1Yr

@Therapeut There are so many, and as I have noticed, differences. So far I have only invested in individual shares. I would now like to invest in ETFs.

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DerDanner@Therapeut

1Yr

@spelvan same, only have shares

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