Gyroscopic Investing

For those of you following the Golden Butterfly portfolio: what funds or ETFs do you use for the small cap value portion of the equities barbell? I invest with Schwab and their Small-Cap Index Fund (SWSSX) is designed to track the Russell 2000, but as far as I can see its annual returns are not that different from their Total Stock Market Index Fund (SWTSX). Is the Russell 2000 considered an SCV index or do I need to find something more specialized? According to an article at Investopedia [1] the "5 best" mutual funds all seem geared toward the Russell 2000. Any and all insights appreciated. Thanks!

[1] https://www.investopedia.com/articles/i ... -funds.asp

It's probably considered one of the least small / value-ie of the available offerings, but I use Vanguard Small-Cap Value Index Fund Admiral Shares (VSIAX)

(the mutual fund version)

Was easiest for me

SCV has underperformed Large Balanced for a while; although this last year it sucked a lot less -- for 2022:
VG S&P 500: -18.15%
VSIAX: -9.31%

Some additional options are SLYV and IJS. They are both "S&P 600 Small Cap Value" ETFs.

Using the research tool on Schwab.com, they list 162 ETF and mutual fund choices for small cap value (good luck with that!).

Schwab lists SWSSX as a blended fund, so it's not one of the 162 mentioned above.

At PortfolioCharts.com, Tyler includes VBR, SLYV, and IWN as choices for SCV when building a portfolio.

flyingpylon wrote: ↑Tue Jan 03, 2023 1:08 pm Some additional options are SLYV and IJS. They are both "S&P 600 Small Cap Value" ETFs.

+1 on SLYV and IJS. I also use AVUV, which seems to be gaining interest (AUM reached 4.8B) and sports a fairly low ER of 0.25%. There are several topics on Avantis ETFs on Bogleheads.

Personally, I decided to use ETFs based on S&P 600 index as it has more screens (including profitability screen) than Russell 2000 and tends to outperform the latter. I don't know why all SCV mutual funds are based on Russell 2000 and it appears that only ETFs use S&P 600. I've read a few articles in the past addressing the issues with Russell 2000 index, here's a couple of them. The first article has a comparison table for the index methodologies.

https://www.spglobal.com/en/research-in ... ears-later
https://www.morningstar.com/articles/93 ... t-the-best

foglifter wrote: ↑Tue Jan 03, 2023 4:27 pm

flyingpylon wrote: ↑Tue Jan 03, 2023 1:08 pm Some additional options are SLYV and IJS. They are both "S&P 600 Small Cap Value" ETFs.

+1 on SLYV and IJS. I also use AVUV, which seems to be gaining interest (AUM reached 4.8B) and sports a fairly low ER of 0.25%.

Thanks to you both, this information is extremely helpful!

I highly recommend this article from the Optimized Portfolio site:

https://www.optimizedportfolio.com/smal ... -showdown/

Personally I'm using half VBR, half AVUV for the SCV allocation in the GB. Whenever possible I prefer to use funds/ETF's from two different companies for each asset class, and in this case it gives me the opportunity to see how AVUV, which is far smaller and more "value-y" than VBR (which is almost a mid-cap play by comparison) but which also has a much higher expense ratio, perform over time.

Hope this helps.

I hang out on the rational reminder forum so...not surprisingly I use a mix of AVUV (also recommended by Paul Merriman's group) and DFSV in our different accounts.

I use more AVUV than DFSV because the ER is lower, but I doubt you could go wrong. If I was being adventurous I might check out VIOV for the extra low ER while being smaller and more value-y than it's big brother at Vanguard..

I am just starting to get into the Small cap Value world in stocks, after reading some of Tyler's articles full of wisdom (thank you so much Tyler)
Is there a reason nobody is mentioning ISCV? Its not one that gets recommended in Portfolio Charts either. Expense ratio only .06% and more small value-y than VBR, at least

With regard to the Portfolio Charts fund recommendations, I wouldn't necessarily interpret the Fund Finder as a comprehensive list or even my judgment of what makes a "good" SCV methodology. In order to make sure that the charts set proper expectations, I tend to prioritize funds that should track my data well. So ISCV is probably a good fund in its own right, but the Morningstar methodology is just a little different from the CRSP/MSCI indices that my data tracks.