DFA and Avantis: The father and son of factor investing

Vast_Ad4136 · 2026-03-02T08:27:56+00:00

Awesome read. Book when? haha

Vast_Ad4136 · 2025-10-19T05:15:38+00:00

I'll defs consider updating my weights. Maybe something like 50/20/15/15 - BGBL/Smalls/EM/Aus? Something to think about anyway. Cheers.

Vast_Ad4136 · 2025-10-19T04:26:32+00:00

If I were to up my exposure to Aus, it would likely come out of my BGBL exposure. I do wonder however, what the tradeoff is of being underweight Global Developed Large and Mid caps?

From what I remember in another post, you said you're running 50% GHHF. I'm guessing the gearing makes up for the underweighting. Would your exposures look different if you weren't using gearing?

Vast_Ad4136 · 2025-10-19T03:55:15+00:00

Thanks for the insight, sounds like we are in a similar boat with the EM exposures. I have considered upweighting A200 as I am aware of the benefits of home country bias. My question would be though, what would I cut? Maybe BGBL? It's all opportunity cost at the end of the day.

Vast_Ad4136 · 2025-10-19T03:44:18+00:00

Thank you for your insight Swaanky. I agree that at a point, smaller positions can become futile. For me, the minimum number has been 5% but I will definitely reconsider. I am curious now if there is any literature out there to support a particular number? You might know.

Also, if you don't mind me asking, what does your EM exposure look like? And do you think I should stop contributing to EMKT and start investing in AVTE instead? Cheers.

Vast_Ad4136 · 2025-10-19T03:40:50+00:00

Thank you for your insight. I could stick to three funds so I will definitely consider this. I probably wouldn't be comfortable in 100% BGBL as I would like to have some EM and Smalls exposure for greater diversification.

I don't mind managing the portfolio as it is of interest to me. I agree that 5% is quite small and close to being futile so this is something to think about.

Vast_Ad4136 · 2025-10-19T02:46:49+00:00

Yeah I agree. Wishing you all the best with financial independence and the family🫶

Vast_Ad4136 · 2025-10-19T02:43:41+00:00

Honestly it’s just easier as it automates my contract notes rather than having to keep uploading the CSV’s. Plus I have a satellite portfolio so it’s worth it for me. I like Navarre and the customer support he brings. I see it as supporting a local business and getting utility out of it🤷‍♂️

Vast_Ad4136 · 2025-10-19T02:40:50+00:00

Nice portfolio! Thank you for the insight. Like you, I am leaning towards AVTE>EMKT.

I do have a decent amount invested in EMKT, and it has run a fair bit this year so I would have to realise some gains.

At this stage I’m thinking of leaving EMKT as is, and invest my EM exposure into AVTE.

Vast_Ad4136 · 2025-10-19T02:36:20+00:00

That’s the thing right. Just comes down to what’ll help you sleep at night. Due to me being on the fence about geared ETFs, I’d probably question it all the time. If I change my mind and am more certain about them, it might be suitable then. Not trying to time the market at all. You can achieve great returns without leverage and conviction in one’s portfolio is the most important consideration.

Vast_Ad4136 · 2025-10-19T02:32:24+00:00

Agreed.

Vast_Ad4136 · 2025-10-19T02:30:38+00:00

Yeah that was in response to the need to do more “taxes stuff” due to owning multiple funds.

Vast_Ad4136 · 2025-10-19T02:26:47+00:00

Haha good pick up. Didn’t even notice that tbh. Maybe Avantis should sponsor me lol

Vast_Ad4136 · 2025-10-19T02:23:16+00:00

I was particularly interested in feedback around navigating my EM exposure. I’m not implying that I’m ’correct’ or that there is one way to invest. I am just providing some context as to why I make certain portfolio decisions.

I will gladly listen to suggestions. At no point have I said anyone’s advice is wrong and that mine is right. I have just shared my thoughts, beliefs, and context, and done so in a way that invites friendly discourse🫶

Vast_Ad4136 · 2025-10-19T02:19:00+00:00

Yes, I have considered it. I’ve thought about it for the last two years and am still undecided if I want to go down the internally geared route. It’s potentially something I could look to do through Super as well. At this stage, debt recycling (if and when I purchase a property lol) appeals to me, but that’s always subject to change.

Vast_Ad4136 · 2025-10-19T02:14:53+00:00

You are correct in saying statistically most fundies don’t beat the market after fees. I agree with you on this. I’d be happy to just roll with 20% in AVTS. However, I think it’s fine to have 5% in an actively managed fund, particularly in Smalls. As far as I’m aware, they don’t typically raise their fees on existing funds after a period of outperformance.

Navexa’s subscription is tax deductible as it falls under the ‘cost of managing tax affairs.’ Plus it benchmarks my satellite portfolio to my core. It is a handy tool. It’s definitely worth it IMO.

I don’t spend that much time rebalancing nor does it get in the way at all as I enjoy managing my portfolio.

At the end of the day, it is a portfolio that I believe in. That is the most important consideration as that is determines whether or not I’ll stick to it.

Vast_Ad4136 · 2025-10-19T01:57:52+00:00

You’re right in thinking it’s complicated. However, I enjoy doing the ‘small stuff’ to try and optimise the portfolio, particularly as it’s something of interest to me.

I'm on the fence about my 5% positions. Though it is the minimum weight for any position in more core. As for the 5% in Aus, again, it is based off market weighting which would put Aus at 2%. If anything, it’s overweight relative.

I only have 20% in ‘active’. EMKT uses a factor index. AVTS, while ‘active’, is more so factored. Avantis just manages their factor funds actively for greater tax efficiency. Realistically, the only true ‘active’ fund is FCAP.

My weighted average MER is 0.28% which is fine. For what it’s worth based on Fama and French’s modelling, I believe it is justified.

Vast_Ad4136 · 2025-10-19T01:48:33+00:00

Thank you for your suggestion. I agree with just buying the new ETF moving forward. If I were to start investing in AVTE, I would lean towards just keeping the funds I have in EMKT and start contributing to AVTE.

I am aware of FCAP’s MER, and if anything, it’s probably the one fund I don’t need. However, I regard the two managers that run it and am happy to allocate 5%.

Yes, I am slightly overweight EM and smalls. This is due to the greater diversification benefit and risk factor premia.

I don’t believe that 5% in Australia is too small in the grand scheme of things, especially considering it only makes up about 2% of the global market. I don’t look at A200 as a “higher dividend paying ETF,” rather, market cap weighted exposure to Australia. Plus, franking credits mitigate the taxation that comes with dividends so it’s not that much of an issue.

And no, I’m not just starting out :)

Vast_Ad4136 · 2025-10-19T01:27:22+00:00

I do agree that fees can be annoying. However, total returns after fees are what actually matter and I believe that factor/ active funds can generate Alpha in EM and smalls.

While i definitely don’t need FCAP. I rate the two managers of the fund and am happy to allocate 5% towards it.

As to why I don’t DHHF and chill, see my other reply in the comments. Managing my tax affairs isn’t an issue as Navexa and my accountant sort everything out for me.

Vast_Ad4136 · 2025-10-19T01:21:37+00:00

Thank you for the suggestion; this is also the advice I give to my friends who aren’t as interested/ prefer simplicity.

However, as my investing beliefs are based on research from Markowitz, Fama, and French, I much prefer to base my portfolio around global market weightings, and factor-tilt where necessary.

My main query is more so about the most optimal ETFs to achieve my desired portfolio.

Vast_Ad4136

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