Author Topic: Emerging Markets Value ETF  (Read 968 times)

samsonator54321

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Emerging Markets Value ETF
« on: October 29, 2021, 07:54:49 AM »
Hi,

Iím looking to diversify my new money going into the market going forward. Iím currently in all US index funds.

Iíd like to put some in emerging markets, but specifically value stocks. I know about VWO, but does anybody know of one thatís more value centric?

Thanks!

MustacheAndaHalf

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Re: Emerging Markets Value ETF
« Reply #1 on: October 29, 2021, 12:03:31 PM »
It's been years since I tilted to small/value, but I dug up a list and found one that might fit what you want:  VictoryShares USAA MSCI EM Vl Mntm ETF (UEVM).  While it's a "value momentum" ETF, it has 64% value and 7% growth stocks, which is a strong growth tilt.  I recommend using Morningstar's "Stock Style" Box, set to the middle "weight" setting to see it yourself:
https://www.morningstar.com/etfs/arcx/uevm/portfolio

Even if you don't go with that ETF, I found Morningstar to be very helpful at separating out names from contents.  You can see if a "value" fund has mostly value stocks, or not.  That's how I discovered "Vanguard Small Cap" is not that great a small cap fund - it has 42% mid caps (at one point it was more than 50%!).  Other small cap ETFs have single digit mid cap allocations.

Personally, I gave up on small and value after I found momentum.  When everyone is chasing performance, a momentum fund captures that excess upward swing, then moves to the next one.  Of the factors that can be used to model the stock market, momentum seems to offer the best chance of outperformance.

CoffeeR

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Re: Emerging Markets Value ETF
« Reply #2 on: October 29, 2021, 02:58:07 PM »
Check out the Avantis ETF's including Emerging Market Value AVES.

https://www.avantisinvestors.com

MustacheAndaHalf

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Re: Emerging Markets Value ETF
« Reply #3 on: October 30, 2021, 04:01:53 AM »
Check out the Avantis ETF's including Emerging Market Value AVES.

https://www.avantisinvestors.com
According to Morningstar, it's 54% value and 3% growth.
https://www.morningstar.com/etfs/arcx/aves/portfolio

Radagast

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« Last Edit: October 31, 2021, 02:08:58 PM by Radagast »

MustacheAndaHalf

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Re: Emerging Markets Value ETF
« Reply #5 on: October 31, 2021, 02:55:49 AM »
Personally, I like to use Morningstar's 9-box to rate value or small cap tilts.  While AVES mentioned already, I'll run it through this approach:
left side is value: 35+15+5 = 55% value
right side is growth: 2+1 = 3% growth

If you have 10% value and 10% growth, there's no tilt at all: it's neutral.  That's why I subtract the growth percentage from the value percentage: 55 - 3 = 52% value tilt.  AVES also is the only ETF with any small cap (8%).
https://www.morningstar.com/etfs/arcx/aves/portfolio

Using value - growth in my suggestion of MSCI EM Vl Mntm: (42 + 22) - (6 + 1) = 57% value tilt.  So despite combining value and momentum, it has slightly more value tilt than AVES.
https://www.morningstar.com/etfs/arcx/uevm/portfolio

First Trust Emerging holds 58 - 3 = 55% value tilt.
https://www.morningstar.com/etfs/xnas/fem/portfolio

Finally Schwab Fundamental with a 60 - 2 = 58% value tilt.
https://www.morningstar.com/etfs/arcx/fnde/portfolio

You could also consider price/earnings ratio (P/E) or price/book ratio (P/B), both of which are used to separate value from growth.  The one I mentioned, UEVM, has a 0.75 p/b, while the others are 0.92 and higher.


@samsonator54321 - Value has been trailing growth for years, which I attribute to a bias against tech stocks.  All the big tech stocks have high P/E and P/B values that exclude them from value screens (except for Buffet's, apparently - Berkshire bought lots of Apple stock).

Apple stock's performance was 27% over 10 years... and 40% over the past 5 years.  Not really slowing down... Amazon returned 32% for a decade, and 34% for 5 years.  I wouldn't buy those companies specifically, but with a value tilt, they're underweighted in your portfolio.

Dicey

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Re: Emerging Markets Value ETF
« Reply #6 on: October 31, 2021, 07:24:51 AM »
Paging @boarder42...

boarder42

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Re: Emerging Markets Value ETF
« Reply #7 on: October 31, 2021, 08:19:31 AM »
I usually go here when looking for funds in certain asset classes. https://paulmerriman.com/best-in-class-etf-recommendations/

His current EM is a larger cap fund but the previous recommendation was a smaller cap EM.

Previous to those 2 he recommended EEMS. His team spends a reasonable amount of time evaluating these for free every 2 years. As was said above run a few of these thru morningstar to get your preferred location on that box. Typically smaller and more value will lead to higher returns long term at the cost of more volatility short term. If you've only ever held large growth assets you may be shocked by the amount of day to day and intraday volatility in emerging markets and small cap.

If you're looking for us small value his recommendation is there as well avuv. It's where most of my investments are today.

Radagast

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Re: Emerging Markets Value ETF
« Reply #8 on: October 31, 2021, 01:29:28 PM »
Typed the wrong ticker. I meant FEMS.

BicycleB

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Re: Emerging Markets Value ETF
« Reply #9 on: November 04, 2021, 04:44:38 PM »
Posting to learn. :)