Small Cap Value fund without a large allocation to financials

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ppnewbie
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Small Cap Value fund without a large allocation to financials

Post by ppnewbie » Mon Apr 17, 2023 4:13 pm

Does anyone know of a good Small Cap Value fund without a large allocation to Small Cap "Value" financials. I want to make a purchase but Vanguards VBR, I believe, has over 20 percent in financials at the moment.
coasting
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Re: Small Cap Value fund without a large allocation to financials

Post by coasting » Mon Apr 17, 2023 7:54 pm

ppnewbie wrote:
Mon Apr 17, 2023 4:13 pm
Does anyone know of a good Small Cap Value fund without a large allocation to Small Cap "Value" financials. I want to make a purchase but Vanguards VBR, I believe, has over 20 percent in financials at the moment.
Looks like funds based on CRSP US Small Cap Value index (e.g. VBR) and Russell 2000 Value index (e.g. VTWV) have greater than 20% allocation to Financials. The funds based on S&P Small Cap 600 Value index are around 15% Financials: iShares IJS, State Street SLYV, Vanguard VIOV.

SLYV breakdown:
SLYV.PNG
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D1984
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Re: Small Cap Value fund without a large allocation to financials

Post by D1984 » Mon Apr 17, 2023 8:13 pm

ppnewbie wrote:
Mon Apr 17, 2023 4:13 pm
Does anyone know of a good Small Cap Value fund without a large allocation to Small Cap "Value" financials. I want to make a purchase but Vanguards VBR, I believe, has over 20 percent in financials at the moment.
A few that come to mind:


Mutual funds:

TNVCX

2.3% in financials


HFMDX

Around 3.5% in financials


AVALX

Around 3.6% in financials


RYPNX

Just under 4.3% in financials


PMJIX (or the retail share class PMJAX)

6.8% in financials


SHDPX

Around 8% in financials


BSCMX

Around 9.2% in financials


WCMFX (or the retail share class WCMJX)

Just over 11% in financials


ETFs:

CALF

As of the moment, 0% in financials (note that unlike the mutual funds mentioned above this one is an index fund and not actively managed...also note that while it is an index fund the index's rules don't exclude all financial stocks per se but they at this point do happen to do so)


XSHD

As of the moment, 0% in financials (but again, note that unlike the mutual funds mentioned above this one is an index fund and not actively managed...also note that while it is an index fund the index's rules don't exclude all financial stocks per se but it just so happens that at this point in time they do happen to do so)


RWJ

Just over 7% in financials (As above.....this is an index ETF but its construction rules aren't designed specifically to exclude--or for that matter, include--financials per se at all)


RZV

Just under 10.7% in financials (again, this is an index ETF but its construction rules aren't designed specifically to exclude--or for that matter, include--financials per se at all)

As far as I can tell there are no broad-based index funds that track a specific small cap value index (i.e. S&P 600 Value, MSCI US Small Value, CRSP US Smallcap Value, or Russell 2000 Value) but in an ex-financials version (indeed, I am not sure ex-financials versions of said indexes even exist).

The one other thing you might try is rather than directly looking for "ex-financials" small value ETFs to instead find a screener for Shariah-compliant ETFs (i.e. ETFs that an observant Muslim would be allowed to invest in without violating Islamic law on profiting from lending at interest) if there is such a screener out there; any ETF or mutual fund that meets the standards for Shariah compliance by definition cannot include companies with more than 5% of their income from lending at interest or even any more than 33.333% of their income from traditional financial services at all; as a consequence any ETFs that include banks in any large percentage of their portfolio don't pass the screener.

One final question, though....why do you specifically want to exclude banks/financials from your small value holdings? Yes, some banks are absolute trash but some of the more conservatively-run smaller and medium sized community/regional banks are excellent investments IMO.
ppnewbie
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Re: Small Cap Value fund without a large allocation to financials

Post by ppnewbie » Mon Apr 17, 2023 8:39 pm

D1984 wrote:
Mon Apr 17, 2023 8:13 pm
ppnewbie wrote:
Mon Apr 17, 2023 4:13 pm
Does anyone know of a good Small Cap Value fund without a large allocation to Small Cap "Value" financials. I want to make a purchase but Vanguards VBR, I believe, has over 20 percent in financials at the moment.
One final question, though....why do you specifically want to exclude banks/financials from your small value holdings? Yes, some banks are absolute trash but some of the more conservatively-run smaller and medium sized community/regional banks are excellent investments IMO.
I am concerned that we have a larger banking problem that was created by the (from what I hear) large amount of bank deposit withdrawals currently taking place. Which I understand may be because the large spread in fed funds interest rates vs standard savings account rates. I would be curious to see what interest small sound regional banks are paying on business and personal accounts.

Also, thanks for all the info. Thats very helpful!
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