Can we count on AVUV high performance in the future?

Nov 13, 2024

Chris Pedersen, Director of Research at Sound Investing and a retired engineer, dives deep into the impressive performance of the AVUV fund compared to Vanguard small-cap value options. He explains AVUV's systematic investment approach and introduces the 'rich minus weak' ratio. The discussion also tackles the future potential of AVUV and its active management style. Additionally, Chris addresses key differences between investment strategies like VTI and AVUS, suggesting AVUS could yield higher returns. Tune in for valuable insights on small-cap strategies and market dynamics!

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ANECDOTE

Paul's Commitment

Paul Merriman founded his foundation in 2012 to educate investors on managing their investments. He appreciates his team's commitment to helping others achieve better financial outcomes.

INSIGHT

Performance Comparison

AVUV outperformed Vanguard small cap value funds over five years, compounding at 14.5% compared to VIOV's 9.9%. This suggests AVUV's systematic approach may yield future advantages.

ADVICE

Investing Strategy

Consider investing in AVUV for its systematic management and focus on profitable companies at low valuations. This approach may provide stable exposure to attributes that yield higher returns.

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Paul mentions his upcoming presentation to the ⁠⁠L.A. Chapter of AAII⁠⁠ on November 16, 2024 10:30 to noon.

Chris Pedersen and Daryl Bahls join Paul to answer your questions. Paul opens the podcast with a brief introduction of the team and notes how thankful he is for their commitment to helping others.

Paul mentions the huge moves small cap value funds made on November 6. He follows that with a comparison of the 5 year returns of AVUV and 3 Vanguard small cap value funds (VBR, VIOV and VTWV). AVUV compound rate of returns were 3 plus percent higher than the Vanguard funds. Paul’s questions: What caused the higher returns and are they likely to be similar in the future?

Chris responds with a lengthy discussion of the systematic approach that AVUV uses and Paul reads what AVUV says about their systematic approach.

Chris compares the DFA small cap value fund (DFSV) with AVUV. Chris also talks about a relative ranking he wants add to his Best In Class recommendations next year.

Chris discusses the quality factor of AVUV vs. funds that build their small cap value portfolio using the Russell 2000 Small Cap Value Index. He introduced a new term: rich minus weak ratio.Paul and Chris discuss the question: Is AVUV and actively managed fund?

Question: JL Collins recommends VTI (Total Market Index) and Warren Buffett recommends VOO (S&P 500). Which do we recommend? Chris notes the important differences between VTI and AVUS and suggests a likely extra .5% return from AVUS.

For those who want to own only total market funds, the group discusses the possibilities of replacing both VIT(U.S. Total Market) and VXUS (International Total Market) with total market indexes that favor slightly smaller companies with a slightly more value tilt.

Paul references Ben Carlson’s article about, ⁠⁠“Some Things I Don’t Believe About Investing.”⁠⁠

Chris, Daryl and Paul weigh in on things they don’t believe about investing.Chris ends with some important comments about how we are likely helping investors.

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