Who knew? 4 Avantis' active ETFs are now available in Japan

[ChapInTokyo]

I was browsing the list of available US ETFs at SBI and saw that 4 of the low cost active ETFs from Avantis are now available in Japan!



Over on their all new Japanese website, I learned that they've obtained the necessary FSA permits to make the following 4 active ETFs available in Japan:

AVUV - Avantis US Small Cap Value etf
AVUS - Avantis US Equity etf
AVDE - Avantis International Equity etf
AVEM - Avantis Emerging Markets Equity etf

One idea I had was to construct an ACWI-like portfolio using these, but substituting US Small Cap Value for the general US Equity in order to forgo exposure to the AI bubble driven stocks of the Magnificent 7. I'll still have exposure to the Magnificent 7 via my 楽天・インデックス・バランス・ファンド（均等型） but the performance of the Avantis offerings since their launch in 2019 seems to be pretty solid when I compare it to MSCI ACWI. What do the boglehead gurus here on the board think about a satellite portfolio of low cost active ETFs which are highly diversified, but skewing to profitable companies in the universe?

[captainspoke]

What is your rationale, given your other post:

I was reading this article about how the proposed tariffs under Trump could very well lead to the US dollar climbing higher.

What are your guesses?

Donald Trump’s policies risk making the US dollar a source of global instability

https://www.chathamhouse.org/2024/11/do ... nstability

Although Trump favours a weaker exchange rate, his policies are likely to have the opposite effect. The risk is that the US dollar could become too strong, which is bad news for the global economy.

How are you tying these two things together? (or are you?)

My thoughts would start by considering whether: tariffs and a trade war might not be so good for int'l/EM equities.

What do you think?

[Tsumitate Wrestler]

AVUV - Avantis US Small Cap Value etf

This is enticing....

The unrealized promise of small cap value and all makes me pause though.

[TokyoWart]

I use some of the Avantis ETFs in my portfolio. The company is very similar to DFA in their approach to factor investing and rules-based stock selection. There is a blog post below which might be of interest:

https://www.whitecoatinvestor.com/avantis-vs-vanguard/

[ChapInTokyo]

What is your rationale, given your other post:

I was reading this article about how the proposed tariffs under Trump could very well lead to the US dollar climbing higher.

What are your guesses?

Donald Trump’s policies risk making the US dollar a source of global instability

https://www.chathamhouse.org/2024/11/do ... nstability

Although Trump favours a weaker exchange rate, his policies are likely to have the opposite effect. The risk is that the US dollar could become too strong, which is bad news for the global economy.

How are you tying these two things together? (or are you?)

My thoughts would start by considering whether: tariffs and a trade war might not be so good for int'l/EM equities.

What do you think?

What is your rationale, given your other post:

I was reading this article about how the proposed tariffs under Trump could very well lead to the US dollar climbing higher.

What are your guesses?

Donald Trump’s policies risk making the US dollar a source of global instability

https://www.chathamhouse.org/2024/11/do ... nstability

Although Trump favours a weaker exchange rate, his policies are likely to have the opposite effect. The risk is that the US dollar could become too strong, which is bad news for the global economy.

How are you tying these two things together? (or are you?)

My thoughts would start by considering whether: tariffs and a trade war might not be so good for int'l/EM equities.

What do you think?

I’m no expert but I believe that (i) diversification is a good thing, and (ii) companies which are making profits are more likely to survive economic turmoil.

[ChapInTokyo]

I use some of the Avantis ETFs in my portfolio. The company is very similar to DFA in their approach to factor investing and rules-based stock selection. There is a blog post below which might be of interest:

https://www.whitecoatinvestor.com/avantis-vs-vanguard/

Thanks!

[captainspoke]

I use some of the Avantis ETFs in my portfolio. The company is very similar to DFA in their approach to factor investing and rules-based stock selection. There is a blog post below which might be of interest:

https://www.whitecoatinvestor.com/avantis-vs-vanguard/

Not sure of the right POV or word(s) to use, but are the Avantis funds (DFA) using it as a kind of smart beta?

(Is this a version/extension of smart beta? --smart beta with a new name?)

[TokyoWart]

I use some of the Avantis ETFs in my portfolio. The company is very similar to DFA in their approach to factor investing and rules-based stock selection. There is a blog post below which might be of interest:

https://www.whitecoatinvestor.com/avantis-vs-vanguard/

Not sure of the right POV or word(s) to use, but are the Avantis funds (DFA) using it as a kind of smart beta?

(Is this a version/extension of smart beta? --smart beta with a new name?)

Good question. I can never figure out what "smart beta" really means (it seems to be a way to avoid calling it "active management" even though these are all active strategies) but if we mean it as creating a rules-based version of an index then I guess this might fall under that umbrella. When I have heard managers from Avantis and DFA talk about their fund construction, they seem to emphasize adding rules that make it so "value" stocks (for instance) in their value funds are also profitable or that they are updating their indexing rules more rapidly than the quarterly or annual updates that index providers use. Personally I have much more in "dumb beta" indexes like the total US market index than in my Avantis or DFA ETFs which I tend to use for the small cap value category. I am not noticing any enormous outperformance but I track my portfolio pretty loosely.

[ChapInTokyo]

I use some of the Avantis ETFs in my portfolio. The company is very similar to DFA in their approach to factor investing and rules-based stock selection. There is a blog post below which might be of interest:

https://www.whitecoatinvestor.com/avantis-vs-vanguard/

Thanks!

Thanks again for this article link. Not only was the article a great read (the readers' comments too!), the discussion of tax-loss harvesting partners got me thinking about whether Dimensional Fund Advisors' equivalent ETFs to the Avantis ones were available in Japan too.

At this point, it seems that neither Monex nor Rakuten have the Dimensional ETFs, but over on SBI I was amazed to see that they had a huge selection of the Dimensional ETFs.

[ChapInTokyo]

What is your rationale, given your other post:

I was reading this article about how the proposed tariffs under Trump could very well lead to the US dollar climbing higher.

What are your guesses?

Donald Trump’s policies risk making the US dollar a source of global instability

https://www.chathamhouse.org/2024/11/do ... nstability

Although Trump favours a weaker exchange rate, his policies are likely to have the opposite effect. The risk is that the US dollar could become too strong, which is bad news for the global economy.

How are you tying these two things together? (or are you?)

My thoughts would start by considering whether: tariffs and a trade war might not be so good for int'l/EM equities.

What do you think?

After some further thought, I decided to bet on Avantis' International small cap value (AVDV) for the Intl component, and value for the emerging market component (AVES), and a combination of Vanguard's U.S. Multifactor ETF (VFMF) and Avantis' US Small Cap Value ETF (AVUV) for the US market component (Some of these are not available yet in Japan, so I guess I'll get them in my Firstrade DRIP automatic re-investment enabled account).

45% VFMF - Vanguard U.S. Multifactor etf (ER 0.18%)
20% AVUV - Avantis U.S. Small Cap Value etf (ER 0.25%)
26% AVDV - Avantis International Small Cap Value etf (ER 0.36%)
9% AVES - Avantis Emerging Markets Value etf (ER 0.36%)

My thinking with this is that even if we hurtle towards a trade war, which will hurt all companies everywhere, the smaller profitable companies which are often serving more defensive, local markets, there will be a margin of safety protecting them. The average expense ratio for the above combination works out at 0.257% which seems very reasonable when compared to traditional actively managed funds.