Should You Be Factor Investing?
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- Опубликовано: 15 сен 2024
- Factors are on the cutting edge of financial market research, but they are also being used to market products that may be detrimental to investors. Don’t get me wrong, factors are more than a sales pitch. They are the mechanisms that drive asset returns.
I’m Ben Felix, Associate Portfolio Manager at PWL Capital. In this episode of Common Sense Investing, I’m going to tell you about factor investing.
Referenced in this video:
Actively Managed Funds In Canada Are Still Terrible - • Actively Managed Funds...
Active Funds Exposed - www.pwlcapital...
The Cross-Section of Expected Stock Returns - onlinelibrary....
On Persistence in Mutual Fund Performance - onlinelibrary....
The Other Side of Value: The Gross Profitability Premium - rnm.simon.roche...
…and the Cross-Section of Expected Returns - papers.ssrn.co...
Couch Potato Model Portfolios for 2015 - canadiancouchp...
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“There are exactly zero investors in the universe who failed to meet their financial goals because they did not hold global REITs or small cap value stocks” Well-said Ben!
What does this sentence mean?
@@stormav It doesn't make much of a difference whether you're factor investing or investing in a regular low-cost globally-diversified index fund. What matters more for your financial goals are your savings rate, asset allocation (stocks and bonds), and how well you stick to your financial plans. Hope that helps
The problem is they met there finacial goals when they turned 65. I dont plan to be wealthy when I am that cloose to the finish line. Id rather enjoy my wealth in my late 40s or early 50s.
It means as Ramsey says in his folksy way that "the biggest mistake people make when investing is they don't put any freaking money in the investment account"
@@stormav nigga i know you're not that stupid
Pls do make more factor investing videos...
Ben’s videos are absolutely incredible, the best on the platform in his field in my opinion. It’s worth mentioning though that Momentum isn’t expensive to capture anymore, that was an issue of the past. MTUM is a perfect real world example of this.
Fees are only one of the reasons that momentum can be called expensive. Transaction costs and taxes are some of the bigger costs. www.dimensional.com/ca-en/insights/have-investors-benefited-from-momentum-strategies
Hi Ben,
First of all I want you to congratulate for your channel, for the amazing content that you share and for the way you explain everything. Listening to you is an absolutely pleasure! Unfortunately I am not Canadian (Spanish living in London) but I religiously follow all your guidelines!
I would love to be able to fully understand factor investing and integrate that to my decision making for investments, so please keep sharing more about that.
For now I am focusing on index funds. You always says (at leats in 3 videos) we should add to our portfolio strategy small cap value funds to compensate the market cap weighted funds (full of large caps and growth funds), which makes total sense! However my question is, would it be a good strategy not also to diversify based on geopraphy, but also in growth , blend and value across small, medium and large?
As an example, Let's pick US for sake of clarity, which option would it be better. Opcion a. Total US market index fund plus US small value caps or option b. S&P 500 fund (large caps and growth) plus medium cap blended and small cap value? I hope my question make sense
Thank you!!
Individuals in Finance will know this has a particular bias to DFA. Not recommending other factor alternatives here is a cheap move.
DFSVX has underperformed IWM over the last 5 years and the difference over 10 years is minimal (actually even worse if the sharpe is the only measure of comparison).
DFA does in-fact use momentum but only for trading related purposes(ie when to add a particular stock to the fund); worth mentioning nonetheless.
I don’t think suggesting individuals should simply disregard factor investing if they do not have DFA access is prudent. While the majority of individuals don’t need to jump into the academic debate with AQR on the abnormality and existence of low-vol, simply acknowledging IWM as an easy and valid retail option to DFSVX is likely a good thing.
Whats DFA?
@@jakel8627 dimensional fund advisors
So from what I understood from previous videos, when stocks are at high valuations, they tend to generate lower future returns. But also, investing all the money into a lump sump in an total market index is the best thing to do at any given time.
Wouldn’t waiting for stocks to be properly evaluated a more reasonable course of action to increase returns. ( I use TMC/GDP to determine the valuation levels of stocks)
only if you expect returns to be negative. and still you need to be able to accurately predict when a downturn is coming, and when the low point is reached. if the market keeps going up for a bit after you decide it is time to get out the eventual dip may still have a low point higher than the point you picked to leave the market. you also need to get back in before the market recovers to where it was before the dip. both of these are not predictable reliably.
Another great one... thanks :)
I was triggered by some German RUclips channels suggesting to implement factor strategies as „satellites“ to e.g. an MSCI World.
As I recently started to monthly invest into MSCI World and MSCI EM (80:20) I‘m currently tracking Momentum, Minimum Volability, Value and Quality as possible „satellites“.
But as I‘ve learned that rebalancing is important I think I‘ll stick to the two ETF‘s mentioned above.
My plan is to keep up for 21 years until I‘ll retire. And 5% p.a. on average sounds like a fine goal to me
With 80:20 you already have an EM factor/political risk factor. A single ETF world portfolio would typically hold less EM.
Might as well just invest into the ACWI. That combines emerging markets and developed markets into one fund and is weighed solely based on market cap, so you don't have to focus on rebalancing yourself.
Hi Ben,
Do certain factors run the risk of losing some of their premium if more investors begin targeting them? I often hear that big funds and investors are not afraid to share a lot of their research into factors because they believe it can't become saturated. Wouldn't companies exposed to these desired factors become more expensive and produce a lower risk adjusted return if the factors became more popular?
Increased buying of value stocks makes them less of a value stock. Change in popularity of value stocks will change status of those stocks (value/growth) compared to your characteristics of those two categories increasing your need to sell some stocks and buy different ones. If you keep your parameters of value stocks the same you should be exposed to the same value premium as it is probably driven by behaviour of the market and their increased risk. Shortly, parameters of value stocks are by itself defined by market popularity and this fact should serve as an insurance of value premium against the popularity.
Abitamim Bharmal
Not an answer.
Research indicates that excess factor returns slightly diminsh after publication, but they are mostly persistent (according to a German portfolio researcher). I think the explanation is that they generally increase risk, so they also offer a higher risk premium, which at least makes sense for small caps. (and Ben Felix also said value can be/is more risky than growth, if I recall correctly)
This also leads to higher volatility, but shouldn't be a problem over a long time frame and in a diversified portfolio.
Though as Ben says in his video "The Problem With Small Cap Stocks", it's not easy to find good ETFs/funds for the factors, and you may need a small cap value combination, as small cap growth underperforms large cap growth.
At least these are my layman conclusions from reading and watching a lot of portfolio research.
Definitely also see his video "Five Factor Investing with ETFs" and read the first article linked in the description.
No momentum? You cut me real deep Ben
MOMENTUM TECH SLOW BLEED INCOMING
Hi Ben! First of all, thank you for sharing all of this information. One question I have is that -- Is a factor diversified portfolio expected to have a higher return than just a standard market cap weighted global portfolio? I do agree that different factors will do well during different time periods, but how significant are the differences here? I wanted to understand if the primary benefit of factor diversifying is lower standard deviation so having a more stable portfolio or is it having a higher return than a market weighted portfolio? I hope you can help me understand this better. Thank you!
Higher expected return, higher risk/volatility, so about equal risk-adjusted returns. If you are willing and able to endure greater volatility and downturns than the average investor and have a long time horizon, you might take this higher risk for higher returns. If you are doubtful about this or might panic sell during downturns or when you see that a market cap index happens to perform better than your factor ETFs for a few years and that's enough to change your mind, there's nothing wrong with market cap weighted passive index funds, which are only expected to have slightly lower returns (perhaps 1% p.a.), for lower volatility.
@@simonp6339 Evidence suggests that the excess returns delivered by the value factor cannot be explained away by the higher risk/higher reward mantra. We have bought into this axiomatic statement of "you must take higher risk to capture higher returns" but fail to recognize it doesn't apply to value investing very consistently. By the way the performance differential between small-cap value and broad equity market investing is huge after a couple of decades. Felix seems not aware of neither the fact that the value factor is not inherently riskier enough to explain its excess returns nor that the performance spread has been so wide in so many cases so as to make smart-beta ETFs worth their higher fees. I suggest you read Value and Growth Investing: Review and Update by Louis K.C. Chan and Josef Lakonishok.
Thank you for this. Which small cap value ETF do you use and recommend?
Thanks for a very clear and concise explanation of factor investing, which can be somewhat confusing. I think that saying factor investing is a way to "beat the market" could be a bit misleading as all you are really doing is overweighting (in a passive manner) the parts of the market that research has shown gives you a higher returns due to higher risk. So really the research has turned alpha into beta. "Beating the market" sounds like some sort of active strategy that requires skill that it is worth paying for, whereas factor investing is not that. I understand that market beta is one of the factors and investing in the factors gives you a higher expected return, so in that sense it is beating market beta.
I agree that simplicity is very important in investing (not just for DIY investors), although adding an additional 2 ETFs to a 3 or 5 fund portfolio is not really that complicated. I say 2 ETFs because there is no small cap value ETF available to the retail investor in the Canadian market, so you only need to consider the US and international markets in which you can use the small cap value ETFs VBR for the US market and DLS for the international market, which is what I do, in a ratio of 1/3 small cap value and 2/3 total market. I don't hold Reits as according to Larry Swedroe Reits really give you factor exposures that you already have if you are doing a small cap value tilt, so adding Reits in that scenario is redundant. I agree Dimensional funds would likely be better, but they are not available to retail investors and it's not worth paying an advisor if all you want is access to Dimensional funds. The main risk when doing factor investing is "tracking error disease", when during times of factor underperformance investors think it's not working and sell, locking in losses, usually just before a rebound. So investors must have a clear understanding that factors can underperform for a long time, even decades, and be prepared to stick with the plan. I think diversifying across factors makes sense as quite apart from the higher expected returns, doing so can smooth the ride somewhat - those in only total market funds got creamed from 2000-2002 when small cap value outperformed market beta a lot.
With regard to the momentum factor, I wouldn't agree that there is no explanation for it - maybe not risk based but there are a number of behavioural explanations, such as herding that explain it. Given that the momentum premium is the largest of all the factors (9.2 above market beta, according to Swedroe, double the next largest, value, at 4.6) what do you think of using the strategy of Dual Momentum (Gary Antonucci) to capture it? Not all in with it, but one strategy you could do is split your portfolio into 2 parts, say 20% for momentum and the rest for buy and hold. If you could keep the momentum part in tax protected accounts, and the buy and hold portfolio was at, say 60/40, when the momentum part was in stocks, you'd be approximately 75/25, then when the momentum part switches to bonds, you'd be about 45/55 That way, you'd also be diversified across strategies, as well as factors, geography etc. The big risk of buy and hold is a market crash, during which trend following does well and the big risk of trend following is a whiplash market, when buy and hold does well, so the two strategies complement each other well.
Great comment, thanks Grant.
The REIT return is explained by a hybrid of the equity and fixed income factor models. If you have exposure to the credit and term factors then I agree that REITs do not add much value. However, in a 100% equity portfolio with no exposure to term and credit, there could be some value in adding REITs. In any case REIT allocations are generally very small, so it probably doesn't matter much.
I totally agree that a factor portfolio is optimal. I also agree with the tracking error comments. That is the main reason that Dimensional restricts the use of their funds. I wrote about tracking error in 2016 www.pwlcapital.com/en/Advisor/Ottawa/Cameron-Passmore/Advisor-Blog/Cameron-Passmore/December-2016/Tracking-error-is-not-a-risk-you-are
I agree that there are behavioral explanations for momentum. I do not agree that those are sensible explanations to base an investment strategy on. This is one of the rare cases where I can't get on the same page as Swedroe. I wrote about this in July, concluding "Without a sensible risk-based explanation, the high costs and tax inefficiency of this strategy will keep me away for now" csinvesting.ca/blog/2018/7/17/should-you-be-trend-following-with-managed-futures
Thanks for watching and for a well-thought comment.
Ben Felix I agree that managed futures have high costs so are not likely a good option, but wondered what you thought of dual momentum as a strategy to capture the momentum premium - where you hold either a US or international market ETF (which ever is most positive with a 12 month look back period), or if both are negative hold an aggregate bond ETF. On average there are only 1.2 trades a year, so costs are very low, provided it is done in tax protected accounts where capital gains tax is not an issue.
Wrt behavioural biases, these are deeply ingrained, really hard wired since the days we evolved on the plains of Africa, so I really doubt they will ever change.
Sorry Grant I mistook dual momentum for being synonymous with managed futures. I had not seen dual momentum until now. I get it now. I'll have to read the book to really get it, but here are my preliminary comments. My biggest concerns with the strategy are that it would be challenging for an investor to implement. I understand it is only a couple of trades so it would be easy from that perspective. I think pulling the trigger on the trades would be tough. I would be skeptical betting on momentum. I know it shows up in the data, so maybe it is my own shortcoming, but it does not seem logical that it will persist.
I'm replying just to keep this little goldmine of information on my radar. I need to dig in to this when I'm not mobile. Thanks!
@@roderiksteenbergen same thing here
What do you think of Fidelity`s factor ETFs? Some of them are relatively new
I became confused by the double negative in the sentence, "Meanwhile, there are exactly zero investors who failed to meet their financial goal because they did not hold global REITs or small-cap value stocks." I would think that factors would say that global REIT's and small cap value indexes are good investments...
They are good investments. I think the point there is that if someone is a great saver and keeps their costs low, the added benefit from additional asset classes is relatively small. It’s still better in terms of risk adjusted returns, but not having those asset classes is not going to be what keeps you from achieving your goals.
I like VG a lot, but DFA is pretty damn cool. I want my investments optimized. That is the goal. Apply the science and keep fees super low. I still enjoy my own stock plays and sometimes invest in companies i really like. That is the gambler in me and that is more entertainment, but some gut feel science if u will. It is certainly more profitable than NFL wagering where if you are good, you break even.
2015 was a good year to abandon factor investing, as large growth or blend stocks such as the S&P 500 and total market were outperforming. Over time, including the near future, this may not be the case, making factor investing more attractive. It's not that complicated. Dedicate a portion of your portfolio to small cap value stocks and you're set.
are there good etfs available to capture small cap value stocks?
AVUV, VIOV
Hi Ben,
Do you have a recommendation for any multifactor ETFs? I was looking at vanguard's MF ETF and found that it was actively managed which had me concerned. If not how could I build a portfolio using non actively managed ETFs to expose myself to the most important factors?
Greg Netols i did an equivalent research. And i found out (correct me if im wrong) , that actively managed etf just means that it doesnt simply replicate a marketneutral Index. Instead it focuses on preselected aspects (Factors) that are picked from the Index. But its still done automatically by algorithms, not an active Management.
I own VVAL for value and small cap exposure.
my factor portfolio consists of a single factor - beta. all in on market cap index
why so conservative?
@@Robis9267 most ranking systems consider this on the aggressive side. most ppl recommend a "balanced" portfolio that has a lower beta than 1.
Should someone who hold bonds be factor investing? Why not simply adding more market risk by having less bonds and more stocks?
Great question, I'm wondering the same.
5:58 Yes it does. People often buy stocks based on past performance, so if you buy a stock based on its past performance, when other people also invest based on past performance, the stock price will go up. But that's just bigger fool theory.
But there's a better explanation which doesn't rely on greater fool theory. Active traders don't monitor their portfolio 24/7 and many don't even try to time the market, so they often don't sell or buy stocks as soon as is optimal, so prices often don't immediately change as much as they should, and so momentum profits on the difference between how much the price changed and how much it should've changed based on the change in fundamentals which resulted in the initial price change.
Thanks for this video Ben. I had never heard of factor investing before watching your channel but I must say it is certainly intriguing & having looked at the return & volatility of such a portfolio over the past 5 years has also been interesting. Thanks for the tip I will keep watching such a portfolio allocation!
Hi, i 've just read your paper on Factor investing with ETF. You should write a book about it. It could interest DIY investor all over the world.
Interested in your take. I’m a big index investor, but I am worried it is too heavily growth cap weighted now. I feel growth will severely underperform in the next two decades to value. How do you recommend retail investors such as myself get exposure to these since institutions like DFA does not offer to retail investors? Vanguard offers a factor fund but I believe it has underperformed. How should the average Joe like me invest if we want additional value-stock exposure since VTSAX May underperform going forward.
I think that excess value exposure relative to the market is always a good idea regardless of current valuations - value is just as hard to time as the market. As you search for value funds you need to be aware that *all of them* will have underperformed. It has been a brutal decade for value investing. That is not a reason to avoid the strategy.
ruclips.net/video/2MVSsVi1_e4/видео.html
ruclips.net/video/kYO7xrHhqsY/видео.html
Greg Erlandson thanks I’ll check this out!
If one has the opportunity to purchase a small-cap value index fund vs. a comparable small-cap value ETF is it always a better choice to go with the fund?
Since ETFs have the chance to incur additional costs and fees due to their ability to be traded more often like stocks, it would seem that an index fund, with its less frequent trading would be more tax advantageous in the long-run. Do you agree? Or disagree?
How is momentum expensive if you do it in a tax advantage account. Furthermore there's no commissions anymore. There momentum etfs with sub 50 basis points...
I usually enjoy Ben's videos. Here, however, I am not sure whether this is an objective, neutral view on factor investing - or whether it is at least in part intelligent marketing. I doubt that the products of Dimensional Fund Advisors are really better than others that private investors have direct access to.
Of course, everybody has his own business interests, and that's OK. People should just be aware of that, even in the case of such an excellent channel as Ben's.
The general public have access to factor based ETFs
I am currently going with 60% on the Vanguard FTSE All-Word (for market risk), 20% iShares Edge MSCI World Value Factor (for value factor) and 20% iShares MSCI World Small Cap (for size factor). I haven't found any better ETF in Europe, but I am satisfied by how simple and diversified this portfolio seems
Did you read his paper on factor investing with ETFs? He suggests that the inclusion of growth stocks within small stocks negates some or all of the benefits of the small cap factor. With that in mind is it appropriate to include the iShares MSCI World Small Cap in a portfolio?
Great summary. I learned a lot from this video. Just FYI, Heqing would be pronounced somewhat like "Huh-Ching" and not "Hek-King" in our Canadian accent.
what do you think about the VVAL (vanguard's global value factor ETF = large/mid/small cap value) as part of a factor diversified portfolio
f a c t o r
What small cap value ETFs can one use as an European to capture the value premium? SPDR has some ETFs which follow the value weighted strategy but I've read in a MSCI research paper that Enhanced Value captures better the value premium. What do you think about it?
P.S: Also, for EM equities, iShares UK does not have any Enhanced Value Index, only Select Value Factor Focus, which I'm not sure if it worth relative to the market cap weighted alternative.
Ben, I've got a question that is stuck in my mind: I see that small cap and value stocks are tilted to different sectors relative to the market, I can't find the proof that SMB and HML factor premium can not be described by the difference of sector exposure. So my hypothesis is that HML and SMB premiums could be attributed to idiosyncratic risk that is tied to set of sectors working in "right" direction, basically pure luck.
I understand that it is idiosyncratic risks and long-term every sector should have equal expected return, but I am still hesitate to agree on that
Suppose all the research on factor investing is indeed correct. As ETF's grow to be more targeted and allow people better access to the factors, wouldn't that reduce long-term returns by inflating the market prices? In other words, what makes the expected 'overperformance' sustainable in the long-term? Feels like trying to get a free lunch, which never really exists. I could understand overperformance for a period of time, but I can't yet understand why folks would believe it could last forever? Appreciate qualified feedback, thanks!
There are two theories for why the premiums would persist:
If they are risk premiums, there is no free lunch.
If they are due to behavioral errors, there are limits to arbitrage.
Great channel Ben, thank you so much. A couple of questions.
- Is the lack of good and cheap factor etfs/funds still true (1 year later)? is it true in the US as well?
- how should factors be combined with other investments given the overlap? for example holding a factor fund and a s&p500 index etf? should it be all or nothing?
- what about multifactor funds? do they make sense as a way to avoid this issue? (if it is an issue)
I disagree with the Momentum characterisation, you can easily capture it with a pretty much perfect replication of the academic definition, for 0.15-0.30% as an ongoing fee. Saying it can’t be capture in a cost effective way due to high turnover is factually incorrect.
The “sensible explanation” part is also dubious, it has a couple of perfectly rational explanations, there’s just some debate over them, but you can say that to some degree for other factors.
The first explanation is behavioural, confirmation bias, herding, mispricing “events/signals”, and anchoring bias or “disposition effect”, are all reasons why Momentum outperforms, and has done so more consistently than other factors.
The second explanation is risk based, namely the risk of reversals.
There’s no failure of investability or sensibleness with modern Momentum Index ETF’s.
I came up with my own way of picking stocks. I stick with market caps usually between 1 and 20 billion that have been around for at least 20 years and are either widely known by name or own and sell products that are. They can not be technology, cyclical, pharmaceutical or commodity companies. It's easy to double a dollar. Not so easy to double a billion dollars. Law of large numbers.
Hi Ben, great video!!! I’m not asking as financial advice, but what are your thoughts on QUAL and MTUM ETF from Ishares? Do they capture well Momentum and Value Factor? I know you’re mentioning it here and also in your PWL paper that you are not quite convinced on so called “Factor” ETFs? Thanks a lot for your reply, I really like your videos, I’ve learned a lot, waiting for new one to be issued!
QUAL captures the profitability factor, not the value factor.
IWQU.L captures the profitability factor better because it's worldwide rather than just US-based (and it's more convenient because it automatically reinvests dividends so you don't have to do it yourself), and IWVL.L captures the value factor (albeit not very well; their largest holding, Intel, has a very high P/E and P/B ratio.)
Agree with you completely and, while you didn't specifically address single-ticket, multi-factor ETFs from Vanguard and BlackRock, I suspect - from the discussion - that you don't like them. Neither do I.
On the lack of access to Dimensional Fund Advisors' series F mutual funds, I believe there's a simple approach, without being too interventionalist, to bringing these to the market: have provincial securities administrators implement a rule change that specifies if a discount brokerage offers the high cost series A of any mutual fund, then they must offer all series of funds (not just series D, but series F, if marketed).
Independent financial advisory and portfolio management firms wouldn't be materially impacted, I think, because they still provide a lot of advice that many investors need (i.e., tax planning, wealth preservation, transfer of wealth planning, etc.).
What do you think? Would you support such a rule change and would you make a submission before securities regulators in any public hearing that they called on the matter?
Cheers,
Doug
I am not a fan of "factor" ETFs. It has become a term that allows an ETF to 10x its fees without adding much value.
As of now it is not possible to access A or F series funds from Dimensional without their approval. Dimensional has to allow trades to go through on fundSERV.
I agree though that investors should get access to at least D series funds for all fund classes.
@@BenFelixCSI Yeah, I agree with you on all of that except the series D and F funds access. I would agree that all investors should have access to series D through all channels, but I think discount brokerages should still have to offer series F since it doesn't make sense for them to earn trailing commissions on series A funds. Not sure if DFA offers a series D fund, but I do think there should be an obligation on the part of fund managers to either offer series D or F to discount brokerages and that the discount brokerage must offer the lowest of the two. I realize that might involve a bit more regulation than you might like, but there seems to be an unwillingness on the part of fund manufacturers and distributors to self-regulate in this area, so I think it's necessary. ;)
Absolutely, though, in terms of full service advisory channels, advisors should be able to charge a reasonable advisory on top of the Series F fund for the value (i.e., advice) they're providing to clients.
Cheers,
Doug
There’s nothing in it for the discount brokerages to offer class f funds though. People should never expect free stuff. I don’t know how it works with ETFs on the back end, but with companies like Questrade offering free ETF buys there’s clearly something in it for them. The same is not true for class f mutual funds.
On the supplier side, DFA intentionally controls distribution as part of their implementation strategy. Limiting cash flows reduces trading costs which makes deep small cap and value viable strategies. It wouldn’t work as well if anyone could buy the product.
Hey Ben, I notice you didn’t touch on the fact that academic factors are long/short. If an investor really wanted to access these return streams, wouldn’t it be prudent to get your beta exposure very cheaply, and then overlay long/short targeted factor exposure?
The academic factors used in regression are long-short, but long-only factors still offer loading on the academic long-short factors. It can be shown mathematically that similar factor exposure can be achieved with long-only and long-short products. An argument for long-short is that it can be more capital efficient. I use long-only for myself and PWL clients.
@@BenFelixCSI I could be wrong on this, but I’m prone to believe that separating your beta and factor exposure may help realize some rebalancing premium over the long run. I’m personally a fan of something like AQR’s approach to factor premia, but I know that can be tough from a behavioral perspective when clients see the market ripping and the factor doing poorly.
@ryanconnolly6703 not sure about a rebalancing premium. DFA has a paper showing mathematically why the expected outcome from long-only and beta plus long-short is the same. Either approach is great though. Long-short can also be interesting for tax loss harvesting.
Hi Ben,
First I wanted to say thanks very much for your common sense investing videos and the rational reminder podcast you do with Cameron, they are entertaining and informative.
I read your white paper on factor investing with ETFs and was wondering how I might determine when reasonable Canadian and international small cap and value ETFs become available. Any recommendations you might have would be greatly appreciated.
Thanks again,
Aaron
I'll be implementing a factor portfolio in January consisting of a 50% allocation to a global ESG index ETF, 40% in a bottom-up ETF that attempts to maintain exposure to the value, momentum and quality characteristics in an intersectional fashion and 10% to a bottom-up pure value ETF.
Hi Ben,
Thank you for sharing all your knowledge and help us build a critical thinking to invest!
I am a DIY investor and I have a question, Do you need exposure to both large cap value stocks and small cap value stock to compensate Market cap weighted index fund in an specific region, or will small cap value alone compensate Market cap weighted index fund?
Thank you!!
Hi! DIY Spanish investor here as well, have you found any answer to this question?
I think Anipiano is onto something. In the last five years VTSMX has outperformed Vanguard’s Small Cap Index Fund and its Value Index Fund - the most recent era when factor investing became so popularized. I remember when the Dogs of the Dow (a value factor flavor) got enormous publicity and also became less effective. Of course Ben F. is just addressing the Canadian market which is probably much different and lends itself to factor investing better.
Paul Merriman proposed a ten asset allocation portfolio: US large blend, US large value, US small, US small value, US REITs, Int'l large blend, Int'l value, Int'l small, emerging markets, and Int'l REITs. Related to this, what do you think about the critics of HML?
I suggest checking out my video on small cap and value. ruclips.net/video/2MVSsVi1_e4/видео.html
2:04 Well, yeah, but Berkshire Hathaway has been beating factor ETFs even after fees.
our factor portfolio dowing very well to the benchmark msci acwi, but not so much relative to other growth big-cap strategies, i wonder how long do investors stick to there strategy before giving up on value and size?
I am a little uncertain what is meant by "factor". I have been involved in an investment process for over 10 years where we use qualitative stock selection "criteria", such as use of leverage, founder-owner-management, exposure to disruption, etc. Are we talking about the same thing? Or are "factors" purely quantitative?
I suggest gaining familiarity with the research of Eugene Fama and Kenneth French. They have shaped the moer view of financial markets. Factors are quantitative. I wrote about this here if you need more detail: www.pwlcapital.com/wp-content/uploads/2019/03/PWL-WP-Felix-Factor-Investing-with-ETFs_08-2019-Final.pdf
Hi Ben, thanks for the great information in all your videos! Got my first etf last month (VT - global stock ETF from Vanguard), and am thinking for my next fund to get something which is exposed to the factors you talk about instead of just buying 'the market'.
In your article that you linked, you proposed IJS (S&P600 Small Cap) as a great way to capture the factor premiums. Looking at the current price compared to its previous highs, it seems to be a great time to get into IJS to buy it 'cheap'.
My question is how does IJS compare to Vanguard's VBR which also purports to hold Small Cap Value stocks? VBR also has around 858 as opposed to 600 stock holdings.
Hi Ben. Great video.
Would you recommend ETFs like IFSW for USD investors? If not, why not ?
Dear Ben. I'm struggling with the concept of factor investing in the sense that it is supposed to "beat the market" and deliver Alpha consistently, and therefore it shouldn't work. If it works, then the argument that active management cannot beat the market is somehow compromised. Why wouldn't active managers follow this evidence and outperform consistently using a diversified portfolio of index funds, tilted towards value and small size? I would love to hear your thoughts on that in a future video. I'm sorry if you have answered this question before. If that's the case please direct me to where I could find your opinion about it. Thank you very much! Great work!
I recommend reading the first half f this paper. It should clear things up for you. www.pwlcapital.com/wp-content/uploads/2019/03/PWL-WP-Felix-Factor-Investing-with-ETFs_08-2019-Final.pdf
I am invested in a couple factor ETFs.....SPLV and RSP
Why is momentum not a factor? Since 1975 Momentum steadily outperformed the Benchmark (this case Msci World). Furthermore there are research papers that show Momentum outperformance arises through the human psychologie (behavioural Finance).
From what I've read there's no theoretical basis for it. Even though there's evidence it exists, they don't understand why.
Bogleheads use the Core Four by Rick Ferri, Total Stock, Total Bond, Total International, Small Cap Value. Some even add in Small Cap International
I don't understand the claim that there are no reasonably priced ETFs effectively targeting well-researched factors available to retail investors. Aren't small size and high relative value the two longest-standing and legitimate factors other than market beta? And are there not plenty of low-cost ETFs for small cap and value stocks? Such as VB and VTV? What's wrong with those?
A lot has changed since this video. Avantis and Dimensional both have ETFs available. VTV is single factor value. VB is single factor small cap. Ideally you want multifactor exposure.
Thanks for your reply.
Can you not get multi factor exposure by just picking your own mix of broad market + small cap + value ETFs? Why do multiple factors have to be combined into one ETF?
Would expect better factor exposure by holding, for example, small cap value stocks rather than small cap stocks and value stocks. That can be pushed further, like small cap value stocks with strong profitability. That’s the kind of thing Dimensional and Avantis do.
What's wrong with using e.g. iShares value factor ETFs?
Is it still true for the diy investor to get an Market Size Index Fund rather than an Integrated Factor ETF or are there alternatives nowdays?
I've listened to a lot of Ben's content, through this channel and the podcast, and man do i still struggle getting a grasp on factors. Is there an example of a portfolio that relies heavily on factor investing?
Did you listen to this one? www.pwlcapital.com/the-rational-reminder-podcast-episode-64-back-to-the-basics-dividends-and-explaining-factors-to-benjamins-mom/
sorry if I may look stupid, but the quote by Dan from the Canadian Couch Potato means that I should or shouldn't invest in REITs or small cap value stocks?
It means that investing in those things is unlikely to make or break your ability to meet your financial goals.
I was wondering when you would talk about DFA. We construct portfolios based on DFA funds, and yes, we can because we are a financial planning firm.
We follow the same portfolio construction strategy as you. As far as I'm concerned DFA is the most sensible way to invest.
@@BenFelixCSI i watch from Germany, big fan of Paul Merrimans "Sound Investing" too - he always recommends DFA Funds, even more then Vanguard, because he likes the Index- Composition even more. Finally Vanguard made it to the german market, but DFA?
vanguard have some factor ETFs. they have low fees. is it any good?
They are actively managed funds that use factors to select stocks as opposed to using factors to adjust the weight of securities in an index. You will see why this matters when my newest video (June 22) comes out in 20 minutes.
They don’t have low fees, Vanguard obscure the transaction fees from the main fund page, the total ongoing fee for their Momentum ETF is 0.71%, more than double iShares MSCI World Momentum ETF’s fee, and the latter does a far better job of capturing the factor than Vanguard’s does.
Ben, what do you think about the "growth" factor? In an environment with a secular trend of 0-2% GDP growth in the developed economy, I just don't believe you can have a growth stock (take FB as an example) with 30% revenue growth and 20% earnings growth NOT being a legitimate factor to generate an equity premium which will outperform the broad index. How many decades does growth need to continue outperforming (take QQQ vs SPY for example) for you to believe it's a legitimate factor?
This question is less about growth specifically and more about market efficiency in general. In an efficient market a value stock is being priced as a riskier asset than a growth stock. Within that framework growth must trail value over the long-term. I suggest listening to this starting at 21:00 rationalreminder.ca/podcast/79
Any thoughts on the so-called "Quality" factor?
Dimensional funds are not concentrated factor funds, more like closet indexers. They are more linke indexfunds, comparable to Vanguard. The acces to Dimensional is a marketing gimmick,. Any advisor can advise them after a attending a seminar. Dimensional funds are ok, but if you really want factor exposure look towards ALpha Architect for instance.
Alpha Architect is not factor investing, it is active management. If you want a massive dispersion of potential outcomes they're great, but they are barely different from any security selection strategy.
Dimensional is not a closet indexer. Lucky for you I just wrote a post about this (not exactly this, but the data is there) www.pwlcapital.com/dimensional-versus-vanguard/
What about political risk? Not valid due to country and time restrictions?
I use an etf based on the msci world value factor index. It is not much better than the MSCI World but probably can squeeze 1% more performance p.a. Additionally it is far better diversified.
If history is any indication, a 1% premium for value over growth stocks is not unreasonable to expect. You pay for it with periods of underperformance like what we have seen with US value over the last decade.
@@BenFelixCSI So do you think the iShares MSCI Enhanced Value ETFs would be the best for capturing the value premium for a retail investor? What option would we have if we also want to add small cap value stocks since MSCI World Enhanced Value only has large and mid caps?
How can one tell if an etf is actually giving you exposure to the factor?
You can use portfoliovisualizer.com
Hi Ben, I really enjoyed this video but I think you were under-selling the skill of active managers who were using factors to improve their results. While we can now use indexes to compete with them prior to factor investing being well known their use of it represented a unique advantage and skill they had. It’s unfair to say that since their performance can be explained in hindsight that it wasn’t valuable at the time
Humm, I'm just wondering: why are value Stocks considered to be riskier than growth Stocks?
Value stocks tend to me less well-capitalized and their expected future returns are riskier. Compare Apple and Exxon. Apple is considered a safer investment because they produce popular consumer electronics and their sales and profits are considered safe, so their share-price is fairly high. Exxon is considered riskier since there's a push for decarbonization, so investors are concerned about its future relevance, so the share-price is low (value) even though Exxon is highly profitable.
What's the view on Joel Greenblatt's "magic formula"?
Thoughts on Vanguard Factor ETFs in 2020? eg Global Value Factor UCITS ETF
Hi Ben,
What’s your opinion about how Vanguard factor funds implement factor investing compared to other companies?
Vanguard's factor funds only cover the US market, so iShares is better.
Although, iShares has a slightly higher expense ratio.
much better audio, thank goodness
I don't think I changed anything. Was the audio bad on other videos?
How times have changed with Avantis and Dimensional factor ETFs available for everyone 😁
I was trying to parse this statement (or quote?) you made near the end of the video:
"There are exactly zero investors in the universe who failed to meet their financial goals because they did not hold global REITs or small-cap value stocks"
That's a triple negative and I don't understand what it's trying to say. Can you explain?
Ilya Blay Holding small-cap value or global REITs will have a negligible effect on your ability to reach your financial goals.
@@jul059 why's that? Is there something about those assets that prevents investors from reaching their goals?
@@IlyaBlay The specific details are a bit beyond me but I think I am on the right track: If the strategy is to have a simple yet diversified portfolio that returns an average of 8% (let's say) because your invests have a general tracking of the market, you invest in total market ETFs (let's say a combination of VGRO + VEQT based on Justin Bender's sample portfolio). You can reach your goals with this method. That's it, you are done. Keep it simple, don't overthink it, don't try to beat the market (it usually ends poorly, and surely will over a long enough time frame).
By going out of your way to add in REITs, which have shown not to be an independent factor (and/or you select them because you are trying to "beat the market"), you are adding a higher chance that you will actually underperform in the market (you are moving away from the fundamental reasoning behind the passive total market ETF approach). At the moment, the research would likely say: yes, you could make money off REITs. However, if you overvalue it in your portfolio are you making more money than you otherwise would? Are you making this over a 20-30 timeframe of a passive investment account? It could be that you are increasing risk for a very limited chance of reward.
Hi ben, im watching from the uk and i invest with vanguard. They have the value, minimum volatility, momentum and liquidity factor funds available all at .22% Warren Buffett preaches value, so what are your thoughts on the value factor fund here?
As someone who is also in the UK, and used to use Vanguard’s factor products, before switching, I might be able to help a bit here. Firstly, Vanguard’s factor products are incredibly broad/diversified, and provide poor exposure to the factors. To illustrate this point you can compare say VMOM, Vanguard’a Momentum ETF, to IWFM, MSCI’s World Momentum Index, you could do this with any of the other factors too. Since December 2015 VMOM has returned 64.95%, VEVE which is Vanguard’s Developed World ETF has returned 63.99%, IWFM has returned 95.36%. Vanguard believe in indexing as a core principle, which is why I think their factor products are so poor, they weren’t willing to focus enough to capture the factor. On top of all of this, Vanguard’s factor ETF’s are incredibly expensive, they just obscure the transaction costs from the main fund page so the 9 investors out of 10 completely miss it. Vanguard’s Momentum ETF has a total ongoing charge of 0.71%, just over double IWFM’s current fee.
www.vanguardinvestor.co.uk/content/documents/legal/vanguard-full-fund-costs-and-charges.pdf
James Newstead thanks a lot for this, i was 1 of the 9 out of 10 who missed that. Do you know what platforms you can buy IWFM in the uk? Blackrock advertise it at .30% but how does that fee add up (including platform charges, and trading costs etc) compared to vanguard’s fund on other platforms?
I use Fidelity mate, commission is £1.50 if you're using the regular saver plan, their fee on ETF's is capped at £45, so you pay essentially zero for everything above £13,000 or so account fee wise, and then it's just the fee on the product, which is currently a 0.3% ongoing charge and 0.04% transaction fee.
Ben, in your opinion, does SCV add diversification to market cap weight portfolio?
It adds independent sources of expected return. Not exactly diversification since it’s just changing the weights of stocks in the same market. But I would say it increases reliability.
How is this video aging in the context of 2022? Are Ishares Factor ETF’s too sophisticated for amateur investors?
Excellent video! Thank you. This confirmed my skepticism towards momentum.
Fascinating. Great video.
Hi Ben,
Different factors would have distinct effects, differing per region. Is this correct?
Kind regards,
Historically they have been pretty consistent across the board in terms of delivering positive premiums. That is why they are so interesting.
What's the relevance of a CFA in an era of indexing investing?
How does the CFA program have anything to do with how people are investing?
Would you please make a US factory model portfolio
No because small cap value stocks have underperformed the S&P 500 the last 15 years
Did Dimensional sponsor / gave some form of financial incentive for this video, or do you hold any stake in them?
AVGV+AVGE+VT+BND+BNDX=20:20:20:20:20........AM I factor investing?
thank you very much for this exposé - super clear - 2 questions though -
1 you say momentum factor doesn't sit on a sensible explanation, but what about the lessons from behavioral finance? the fact one can not stay away from a stongly performing stock, even if it "seems irrational", because of FOMO (fear of missing out and... being fired... ) , and likewise, holding on to cheap stock that are not participating in a rally can prove "too expensive" career-wise (the market can remain irrational longer than you can remain solvent)-
2 what about environmental related factors? are they starting to show up? like high cabon footprint companies? Is there enough dataset to identify and compute such factors?
thank you
I would not call behavior a sensible explanation. I agree that it is a plausible explanation, but from the perspective of this being a persistent return premium in the future, it seems like likely that it will persist. Betting on human behavior is very different from better on a priced risk.
ESG factors sort of show up. Companies with high sustainability rankings do tend to be more profitable, but I do not think that means that sustainable companies are more profitable. I think that it means that more profitable companies make more effort to be sustainable. Discussed here rationalreminder.ca/blog/2018/9/12/responsibleesg-investing
You say value stocks are riskier than growth stocks? Why would that be?
Value stocks tend to me less well-capitalized and their expected future returns are riskier. Compare Apple and Exxon. Apple is considered a safer investment because they produce popular consumer electronics and their sales and profits are considered safe, so their share-price is fairly high. Exxon is considered riskier since there's a push for decarbonization, so investors are concerned about its future relevance, so the share-price is low (value) even though Exxon is highly profitable.
In my humble, un-researched, opinion, the relative importance of factors will vary over the long term due to feedback between hypothesis and investment. What works today will not necessarily work tomorrow, though it very well might work once again the day after tomorrow.
Comments on Avantis funds - ex DFA execs.
I know an ETF, DEUS based on Russell 1000 comprehensive factor index which provides access to Size, Value, Momentum, Volatility and Quality factors, all in one one index at an expense ratio of 17 bps. DFA funds are not available to retail investors I guess.
Correct DFA is not available to retail investors which is unfortunate.
I am always skeptical of ETFs that attempt to capture factor returns. Most factor products, including this one, use factors that may not be robust.
For example, DEUS uses quality as a factor defined as a composite of profitability, efficiency, earnings quality and leverage. Valuation theory suggests that variables that help predict expected future profitability should be related to expected returns. ROA, which uses net income, can be affected by one-time expense variables such as extraordinary items. Research by Robert Novy-Marx show that you get a better proxy for expected future profits if you move up the income statement to avoid volatility from things like extraordinary items and taxes. Once you control for the level of profitability, the variability of profitability contains little additional information about future profitability. Academic studies such as Fama/French 1992 also show that once you control for size and book-to-market, leverage contains little additional information about differences in average returns.
The other concern is implementation. Russell rebalances their indexes annually. By restricting rebalancing to once a year the portfolio is exposed to substantial style drift. For example, a value stocks may not stay a value stock, and small may become large, reducing exposure to the factors until the next reconstitution. Furthermore, the risk controls on security/sector/country weights are only applied at reconstitution, which means the portfolio can deviate substantially from market cap weights between reconstitution dates.
@@BenFelixCSI your skepticism about factor ETFs are specifically around the likes of VVL/VMO/VLQ or XCV/XFC? Because these are forms of active management, or some other reason? What about a straightforward tilt toward small cap like Grant referenced above (say by holding VBR and VSS) -- would you consider that a better strategy for DIYers to get factor exposure? In fact, a separate video on retail investors might sensibly tackle this would be really interesting.
P.S. Thanks for plugging The Rational Reminder in your later videos. I'm binging it. So bizarre hearing you talking without a script! :)
@anothercrappypianist VVL/VMO/VLQ are straight up actively managed in the sense that they are selecting individual stocks. Using factor models, sure, but still selecting stock.
_The portfolio management team selects stocks and constructs the portfolio using quantitative models that are designed to achieve targeted exposure to the value factor. In contrast to indexing’s fixed rebalancing schedule, the team adjusts the portfolio as needed to maintain exposure to the factor while considering transaction costs._
XCV and XFC are more in line with an index strategy as they are tracking indexes as opposed to selecting stocks, but they're still not ideal.
XCV tracks an index with 57 constituents that rebalances annually. 57 securities is arguably not diversified enough to offer factor exposure, and even if it is, annual rebalancing is probably not enough to capture the value factor.
XFC claims to offer multiple factor exposure. There are a handful of issues with implementing a factor product. It is not always clear which factors you want exposure to and why. Once you know the factors that you want exposure to, you are unlikely to get consistent exposure through an ETF due to the way that ETFs are implemented.
For example, XFC tracks the MSCI Canada IMI Select Diversified Multiple-Factor (CAD) Index which targets Value, Momentum, Quality and Low Size.
MSCI’s value factor uses forward P/E, enterprise value/operating cash flow, and P/B. Forward P/E uses analyst forecasts of EPS. However, Fama/French 2006 show that analyst forecasts do not add to the overall power of profitability forecasts after controlling for size and other accounting variables including the level of lagged profitability.
Momentum appears to be persistent in the data and the historical premiums have been sizable, but it doesn’t have a sensible explanation which raises the question of whether it is likely to persist. Even if we assume that it will persist, the momentum premium decays rapidly and therefore requires high levels of portfolio turnover to maintain consistent exposure to past winners. The index reconstitutes semi-annually which makes it challenging to capture the momentum factor.
MSCI’s quality factor is measured using ROE, leverage (Debt/BE), and earnings variability. Valuation theory suggests that variables that help predict expected future profitability should be related to expected returns. ROE, which uses net income, can be affected by one-time expense variables such as extraordinary items. Research by Robert Novy-Marx shows that you get a better proxy for expected future profits if you move up the income statement to avoid volatility from things like extraordinary items and taxes. Once you control for the level of profitability, the variability of profitability contains little additional information about future profitability. Academic studies such as Fama/French 1992 also show that once you control for size and book-to-market, leverage contains little additional information about differences in average returns.
As mentioned above, the index reconstitutes semi-annually. Stocks migrate across factor exposures over time. Consistent factor exposure requires more frequent maintenance. It's like buying a bunch of small caps today and hoping they stay small for the next six months. In reality, half of them may have become mid caps after six months.
The size premium basically goes away when you include small cap growth stocks with low profitability in the small cap return. Those stocks are included in any small cap index, so capturing the factor exposure is hard to do, especially considering that small cap products will usually have higher MER, higher turnover, and may need to be purchased in USD due to the lack of Canadian products. Using a small cap value ETF is probably the best approach. VSS (not small value) has about 15% overall is in small cap growth according to Morningstar. VBR is a little better with only 4% in small cap growth.
I have a video coming out on small caps specifically, but I agree that a video on retail factor exposure in general would be good.
Sorry, that was a long response.
It's great to know that you're listening to the podcast!
I learnt more about Factor investing just by reading your comments than spending months reading factor literature. Beautifully summarised. Thanks a lot! Very rare to find such knowledgeable Financial advisors and even rare are those willing to share the knowledge in a way non professional investors can understand. I agree that a specific video on factor investing for retail investors would be useful.
@@sivas7718 That's great! I am glad that the comments were helpful. I could probably make a video based on the comments discussion.
which is better to invest in: index funds or REITs?
also, are blue-chip stocks and large-cap value stocks the same thing?
REIT index fund could be added to a portfolio of stock index funds. I don't think it makes sense to say that REITs are better or worse than index funds. If I had to choose I would invest in total market equity index funds as opposed to REIT index funds. Equity index funds tend to hold REITs.
Blue chip stocks will often be large value stocks but not all large value stocks would be considered blue chips.
Vanguard says "Factor-based funds come with significantly more risk than you'd experience investing in the broader stock market."
Yes, just as equities are more risky than bonds (and have a positive expected return as a result ;) ).
Great video Ben. I'm wondering why in your paper on factor investing with ETFs you have both IUSV and IJS? i.e. why not just have IJS which has somewhat deeper value exposure and (of course) more small cap exposure?
It's not just about the regression coefficient. We still want to be diversified. What if small value does terribly for 10 years while large value does well? It's kind of like saying why not go all US equity because it has been the best historically. We still want to remain diversified.
I agree with everything that you wrote regarding US stocks being a weak comparison to the size premium. My intention was to offer an analogy that most people would understand. Most people would not have presented the persistent, pervasive, robust, and sensible qualifiers to disagree with me ;)
I do not have a crystal ball in terms of the optimal weights for a factor tilted portfolio. I agree that statistically an all small value portfolio would be optimal, but that does not mean it is sensible, especially for a human who may suffer from tracking error regret. The factor exposure in the model portfolio roughly matches that of a Dimensional Fund Advisors portfolio. To get there I needed a mix of IJS and IUSV. Using only XUU and IJS pushed too heavy on SmB relative to my (admittedly arbitrary) target factor exposures.
IUSV is neutral (coefficient of 0) on SmB. Adding it alongside IJS allows for the deep value exposure to remain while pushing down SmB a bit. To answer your question, one would hold a small value ETF and a large/mid value ETF to tailor their exposure to the size factor while maintaining exposure to the value factor.
@@BenFelixCSI Fair enough. Thanks for the reply!
Thanks for the excellent questions!
@@BenFelixCSI Does adding VBR and VOE at the expense of some of the large cap value increase diversification because you are getting different small(ish) value companies than the SCV etfs, or is this probably negated by losing size diversity? A related question would be whether including different indexes within a factor tilt (like both viov and vtwv for SCV) increases diversification or whether it is a diminishing benefit after you have enough companies...Another way to ask this might be: is it the factor itself that performs in a given year for reasons x, y, and z, or more traits specific to the mix of companies that comprise that factor in a given year?
Momentum exists because markets are reflexive. How is that not a sensible explanation?
Behavioural explanations for factors rely on the persistence of irrational human behaviour. That is not sensible. I get it, but it is not something I am willing to bet on.
@@BenFelixCSI Sounds very Ivory Tower-esque to me. I don't need a Phd to tell me that human irrationality is not decreasing over time so I WOULD bet on this, in moderation of course =)
@@PW060284 I like the way that DFA thinks about it. They don't treat it as a standalone factor, but they use it to make trading decisions. They still get some exposure to momentum but they are not incurring trading costs or high turnover to try and capture it.
This factor investing isn't for me. I was building my portfolio with VOO, VGT and VB but now I am going to put all new money in VTI (total market index). I think VTI covers all segments of the market efficiently and reduces cost in management. Thanks for your videos.
While that's a solid approach, you might want to consider VT for global diversification.
Doesn't commitment to factor investing contradict EMH?
Depends on the type of factor. A risk-based factor falls under EMH. That's where the three-factor model came from. It was a risk-based explanation for anomalies. Risk-based explanations can exist in an efficient market: the market prices in additional risk leading to higher expected returns.
Behavior-based explanations contradict EMH.
common sense says you should learn about the business before you invest in it. Not looking at some factor.
Factor models sound like just the attributes in a regression model to me
Yes. Discussed more here ruclips.net/video/yco0sC7AJ2U/видео.html
another great video Ben!
so they beat the market by taking more risk. Thanks for giving people advice for investing in high risk stock by their own.
i think you're proceeding on a different understanding of risk.
Please make a video on sectorial funds.
What’s that?
@@BenFelixCSI
Funds which focus on certain sectors like Pharma , Banking & Financial Services , IT....
Oh, sector funds. Yes I think I’ll do something like that. I am thinking about the concept of “not all index funds are good investments” where I will cover sector funds.
@@BenFelixCSI
Thanks Ben.
Great info Ben, btw any thoughts on Investors Business Daily top 50 growth stocks? I've been trying to trade 4 or 5 aiming for 5-10% gains while setting 3% trailing stop losses.. like the strategy?
That is not something that I would ever consider/recommend. I suggest watching this video: ruclips.net/video/AecvTErBQY8/видео.html