5D·

Small caps and active ETFs

@Tenbagger2024 because of the questions about factor ETFs

If you want to go into small caps, then I always recommend adding another factor, as the size factor itself is not very strong.

Primarily, you should try to remove the unprofitable companies, as these destroy almost all of the excess return.

This has been scientifically analyzed here:

https://www.sciencedirect.com/science/article/pii/S0304405X18301326

Therefore, I recommend either small cap value $ZPRV (-1,39 %) / $ZPRX (-0,81 %) or add a quality filter on top: $RTWO (-1,63 %)

Now that we have clarified that, I would like to open another barrel at this point. Why not use an aCtiV eTf? *haha ha ha ha, ... muhahahaha*

There has recently been a new ETF provider in Europe and it brings us this beauty, among other things: $AVWS (+0 %)

Avantis is a company formed from former Dimensional Fund Advisors employees.

In the institutional sector, they are known for their factor ETFs, which are all rule-based investments but do not track an index.

And so I asked myself the question, does it always make sense to have an index?

After all, an index is also a rule-based system built by humans. So why not implement the system without an index?

Dimensional Fund Advisors have been doing this for over 40 years.

That's why I've been looking at other such rules-based ETFs. ($IQSA (-0,98 %) for example)

In my opinion, many investors do not distinguish between rules-based investing and stock picking, they all think of Dirk Müller $OD6H (-0,35 %) and $ARKK (-3,42 %) but there are many shades of gray between those and an MSCI World, which in my opinion do not receive enough attention.

@SchlaubiSchlumpf
@DonkeyInvestor
@Stullen-Portfolio

What do you think of ETFs without an index?

21 Comentarios

Nostradonkey💩@DonkeyInvestor

The 2000s have called and want their managed funds back.

•

Ver todas las 5 respuestas adicionales

Rmann@Epi

My guess is that rules-based ETFs with a low TER will experience a significant upswing after the next crash of the major indices. After all, if individual ETFs have significantly less drawdown, then these are the ones. And the average investor is a momentum hunter in disguise.

Of course, these ETFs will then underperform in the subsequent upswing and be out of fashion again at the market peak. 😅

•

Vanguardium LeviOsa 🥪@Stullen-Portfolio

I am happy to share my thoughts on this, @PowerWordChill, because I am 50% invested in ETFs, which are referred to as active ETFs at justETF.

Active ETFs are also index funds, because they also always "follow" an index - albeit a (sometimes very) specific one.

In the case of extremely broadly diversified world ETFs, there is often talk of "sediment", which limits performance. In my opinion, this is where both factor ETFs and active ETFs come in to reduce the sediment.
Of the four ETFs that replace a classic world ETF in my portfolio, two are active and two are passive.
The active ones are $JREG with around 680 companies and $IQSA with around 200 companies. The two classic passive ETFs are $GGRG and $XDEM with 540 and 350 companies respectively.

So yes, there is a large gray area before it reaches Mueller's or Wood's under-dimensions.

My largest portion is also commonly referred to as an active ETF - which doesn't fit for me personally, because $216361 invests completely rule-based and without decisions being made by management.

I actually find the $AVWS very interesting. However, I won't be investing in it and will stick with 100% US and $ZPRV for small caps (makes up an eighth of the portfolio).

Regards
🥪

•

Rmann@Epi

The famous "passive investor"! 😅

•

Ver todas las 2 respuestas adicionales

Beat The Bank@randomdude

I think most of the discussion is a waste of words, as you basically wrote yourself ("index = rebased system"). I see no difference in whether an ETF is based on the rules of MSCI or FTSE or whether the rules come from the issuer itself. The important thing is that they are rules that do not require individual, case- or situation-specific management decisions. Only if this is provided for and practiced should we speak of active ETFs. I have the impression that this term has often been used by the industry in recent months for products that are based exclusively on rule-based systems (to justify high fees?).

•

Tenbagger2024@Tenbagger2024

Thanks for the cool article.
which will certainly make it even more difficult for some to find the right product. Which is why you might end up with the World after all.
A value ETF may certainly be interesting. Especially because many people think of Buffet when they think of value.
But then I look at the position of the ETF and see Tilray, a cannabis stock, as the largest position. Then the question arises as to whether the value calculation works here.
However, the other products you presented can convince me with a look at the position and the approach.

••

Garfield@Bonus

That's what Wikifolio is for. 🍿

••

Ver todas las 3 respuestas adicionales

Uwe@SchlaubiSchlumpf

huh? What do you have against $OD6H? Isn't he so often in some reports? I'm in it 90% of the time! I don't trust any other manager, so I don't trust $IQSA or $AVWS.

Okay, that's nonsense of course.
However, I don't quite understand what the $AVWS is all about.
I have read that it is based on the msci world small cap value, but I don't think it works according to fixed rules. In the Key Investor Information I read that they reserve the right to move money into cash equivalents in good market phases. That sounds very active to me.

If it did this on a rule-based basis, it would be as close to an index as possible. Then the only question would be why I don't use an ETF that does the same thing.
There are cheap ETFs as alternatives, which have also been around for longer and have a volume where I don't have to worry so much about them being closed again.

••

Ver todas las 2 respuestas adicionales

Vanguardium LeviOsa 🥪@Stullen-Portfolio

Since the $AVWS is not yet tradable at Scalable, I contacted customer service with a simple, fairly specific question and received this extremely slow response:

If you are having trouble finding a particular security in Scalable Broker, it is possible that it is not yet listed on the Munich Stock Exchange. To check this, you can search for the security in question by name or ISIN at https://www.gettex.de/suche/.

If it is not listed on the stock exchange, you can apply for a listing by sending an informal e-mail to listing@gettex.de. Include the name of the proposed security and its ISIN or securities identification number (WKN).

The Munich Stock Exchange examines applications for admission on a case-by-case basis and decides on the admission of securities at its own discretion. In general, securities must have sufficient liquidity, be accessible to European private investors and offer euro settlement via Clearstream (especially for ETFs). Listing on another stock exchange is also required.

Further information can be found at https://www.gettex.de/.

If the product is available on the exchange but not on Scalable Broker, this may be due to factors such as availability to retail investors and we cannot guarantee product availability at this time.

🤷‍♂️

••