Author Topic: All Value Fund Portfolio for Maximum Growth  (Read 2325 times)

bootyman

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All Value Fund Portfolio for Maximum Growth
« on: December 01, 2015, 10:44:05 AM »
Has anyone considered an all value fund portfolio.  I notice betterment has a value fund tilt and their research and findings show better growth of the long term.  I just backtested it and the results look pretty good. 

Interest Compound

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Re: All Value Fund Portfolio for Maximum Growth
« Reply #1 on: December 01, 2015, 10:59:40 AM »
There is no free lunch. Most people who tilt end up underperforming the market. Keep it simple.

MDM

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Re: All Value Fund Portfolio for Maximum Growth
« Reply #2 on: December 01, 2015, 01:30:09 PM »

AdrianC

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Re: All Value Fund Portfolio for Maximum Growth
« Reply #3 on: December 01, 2015, 04:23:01 PM »
According to this:

https://www.researchaffiliates.com/Our%20Ideas/Insights/Fundamentals/Pages/SBS/5-SmartBeta-vs-Traditional-Value.aspx

traditional cap-weighted value indexes don't do much better than the broad index, at least for large caps.

The "fundamental index" did quite a bit better...

Telecaster

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Re: All Value Fund Portfolio for Maximum Growth
« Reply #4 on: December 01, 2015, 04:47:11 PM »
Has anyone considered an all value fund portfolio.  I notice betterment has a value fund tilt and their research and findings show better growth of the long term.  I just backtested it and the results look pretty good.

Reminds of another recent thread  :) 

I dunno much about Betterment, but I found this on their website:

Quote
Our U.S. exposure covers the total U.S. market with a slight tilt towards value and small-cap stocks. The value and small-cap tilt has tended to beat the market in the long term, based on research by Nobel-prize winner Eugene Fama and Kenneth French.

So it isn't saying "just value" it is saying total market, plus value, plus small cap tends to beat the market.   That's true, and pretty basic portfolio theory.

The other thing that is important to recognize is that the strategy also assumes rebalancing.   IIRC, Fama and French rebalanced quarterly.   Dunno what Betterment recommends, but keep that in mind, in case there are frictional costs that have to be accounted for.   


EarlyStart

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Re: All Value Fund Portfolio for Maximum Growth
« Reply #5 on: December 01, 2015, 06:12:08 PM »
The reason I'm skeptical of using a heavy value tilt is exemplified by this thread. I can't think of the last time I heard someone say they want to tilt towards growth. How great can it be if it's so popular and value becomes less value-y as investors bid up the prices? But who knows? Maybe it will outperform.

Interest Compound

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Re: All Value Fund Portfolio for Maximum Growth
« Reply #6 on: December 02, 2015, 04:41:53 PM »
Has anyone considered an all value fund portfolio.  I notice betterment has a value fund tilt and their research and findings show better growth of the long term.  I just backtested it and the results look pretty good.

What shows better growth over the long term, all depends on what day you happen to be looking. Sometimes it's growth. Sometimes it's value. Sometimes it's large-cap. Sometimes it's small-cap...etc.

Don't base your investment decisions on what tilt performed best in the past, as that answer is constantly changing.

Frugancial Advisor

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Re: All Value Fund Portfolio for Maximum Growth
« Reply #7 on: December 02, 2015, 05:57:21 PM »
Has anyone considered an all value fund portfolio.  I notice betterment has a value fund tilt and their research and findings show better growth of the long term.  I just backtested it and the results look pretty good.

What shows better growth over the long term, all depends on what day you happen to be looking. Sometimes it's growth. Sometimes it's value. Sometimes it's large-cap. Sometimes it's small-cap...etc.

Don't base your investment decisions on what tilt performed best in the past, as that answer is constantly changing.

Agreed.

Past performance is not indicative of future performance, although past risk-adjusted performance can provide an idea of future potential. Don't look where performance has been, but where it is most likely to go. Maximum growth will always coincide with equities that are producing a product or service that is high-in-demand, profitable, recognizable, and innovative. In the past, this has come from Small Cap equities. In the future, we can only speculate on what companies will drive this growth.