VEA Reddit Mentions | ChartExchange

If you don't want the Dimensional/Avantis style large cap value exposure, that's understandable, but then I think it should be a pretty easy decision to avoid AVNV since it includes AVIV.
I understand wanting to tilt both small and value if possible, since that's where the theoretical premia exist. However, recognizing that AVNV is itself about 47% AVIV, 29% AVES, and 24% AVDV, I ended up settling on something similar. During my thought process, I asked myself three questions:
- How strongly do I believe in the factor tilts? Modestly. They've been very disappointing in the US, but better internationally. However, am I willing to go all in? If so, which of the funds has the best factor loadings?
- What if I'm wrong? Do I want to hedge my bets with a developed or EM core position, and if so, do I want to use Dimensional/Avantis or the much cheaper Vanguard equivalent? As it turns out, in taxable, in some cases, the tax efficiency of the "active" funds makes up partly (and sometimes completely) for the higher expense ratio.
- How have they actually performed? This is a bit of performance chasing but it's nice to make sure that things make sense on backtest.
I came to the following conclusions:
- For developed core, both DFAI and AVDE have outperformed VEA, albeit with light factor tilts. Maybe it's not worth paying for, but DFAI's foreign tax credits were worth about 7-22 bps depending on your tax bracket, which more than made up for the difference. AVDE did not perform as well, was less tax efficient, and was more expensive.
- For developed large cap value, I calculated DFIV's FTCs to be worth about 11-13 bps and AVIV's to be worth 7-10 bps compared to VEA. I also wanted to tilt small cap like you did, but DFIV and AVIV have actually outperformed DISV and AVDV respectively over the life of their funds; both have also outperformed VEA dramatically.
- For developed small cap value, DISV (FTC worth 18-28 bps compared to VEA) is much more tax efficient than AVDV (FTC worth -2 to -7 bps, or less tax efficient than VEA in 2024). DISV has also performed better, with DISVX being roughly equal over their respective lifespans. That being said, I went with AVDV for its superior factor loadings, higher AUM/liquidity, and lower expense ratio. Both have outperformed VEA.
- For emerging core, DFAE and AVEM do not have substantial tax advantages over VWO. Although they have outperformed, not sure if it's worth the expense ratio if we're relying on alpha and only minimal factor tilts. It sounds like you're skipping this (or holding it through VXUS) anyway.
- For emerging value, again, neither DFEV nor AVES have substantial tax advantages, but slight edge to DFEV. Slight edge for performance as well. However, I went with AVES personally because of the much better factor loadings and lower expense ratio. Unfortunately, the bid/ask spread in these ETFs is quite substantial because neither ETF is particularly liquid.