Invoking famous value investors and comparing that to an index fund labeled "value" is not the same thing. A typical active value investor would be looking for opportunities where they can get a deal, and an index fund is following some kind of algorithm or definition.
https://personal.vanguard.com/us/FundsStrategyAndPolicy?FundId=5860&FundIntExt=INT&funds_disable_redirect=true"The fund employs an indexing investment approach designed to track the performance of the the CRSP US Small Cap Value Index"
"The fund reserves the right to substitute a different index for the index it currently tracks if the current index is discontinued"
http://www.crsp.com/products/investment-products/crsp-us-small-cap-value-index"CRSP classifies value securities using the following factors: book to price, forward earnings to price, historic earnings to price, dividend-to-price ratio and sales-to-price ratio."
Where:
- Most companies are valued on cash flow and book value is heavily influenced by GAAP rules
- Forward earnings is a guess
- Historic earnings are not a guarantee of future earnings
- Dividend doesn't even belong in a value estimate (though, that's more my opinion)
- P/S is heavily dependent on business model
I don't really have a strong opinion, but it looks suspiciously like an algorithm determined by humans.
I do know that investing focus in small/mid increases drawdown. I learned that well in 2009. I left my portfolio alone at the time, but as I get closer to "winning the game" I appreciate the value of simplifying and now it's at a normal balance.