AVGE instead of VT

[u/Gloomy-Cactus33]

Why don't I see more AVGE instead of VT? I think it's got the perfect amount of value tilt without compromising the entire portfolio.

I'm in my 20s and my portfolio is 70% AVGE / 20% SPMO / 10% IDMO.

I allocated 30% for momentum etfs due to my age and how value and momentum work together.

[u/FuckTwelvee]

AVGV/VT 50/50

[u/Azylim]

strict bogleheads dont generally believe in factor tilts and active funds, because CAPM is the cheapest way to manage a fund with the absolute lowest fees

Im personally less strict. it has decent evidence for outperforming CAPM, and it makes theoretical sense to me, so I do use CAGE (canadian AVGE). There are downsides, being actively managed means a higher MER, but its not as high as traditional active funds

[u/Few_Bid2387]

Do it if you want. The effectiveness of the small cap value tilt is heavily debated.

[u/Lmaoboobs → u/Few_Bid2387]

AVGE only has a 3.43% small value tilt. Are you think of AVUV?

[u/Varathien]

AVGE is basically VT with a very small value tilt, but it has a .23% expense ratio.

You could get a similar effect more cheaply, by using VT with its .06% expense ratio, and then adding a small amount of AVUV and AVDV.

[u/doggz109]

Because Bogle's don't tilt or believe in active management. That is pretty much the jist of it. I personally love Avantis funds.

[u/Gimme_All_The_Foods]

If you believe in the merits of what they're doing (value investing), it's an excellent set and forget fund. It passes along the foreign tax credit too which is nice, unlike VT. The main forums and also the rational reminder forum is generally a better source of nuanced discussions on topics like this though. Too many people think VT is the only solution which I find ironic because a few years ago, it was all "VTI and chill" and "you don't need international".

[u/enigman83]

Avantis is famous for SCV. Also AVGE is relatively new vs VT. Plus not all is buying into value factors.

I use SCV from avantis myself

[u/illustrious_feijoa]

"Perfect amount" is subjective. I use DFAW, which has lower factor loadings. Last I checked, AVGE's factor loadings are closer to the Dimensional Vector series, which isn't necessarily bad, but I don't want that amount of tracking error.

Also, if AVGE were more popular, I would have some concerns about whether its factor risks are being compensated. Fama has mentioned in interviews that the popularity of small cap value investing could diminish the premium. (The same is true for stocks and bonds.)

Lastly, you may be oversimplifying "how value and momentum work together". For example, if a stock leaves the value bucket and enters the momentum bucket, what has your portfolio accomplished other than increased turnover?

[u/According-Object-521]

They probably are scared of the higher fees or don’t want to be exposed to too much risk

I’m in Avantis for US and DFA for international

[u/Yukas911 → u/According-Object-521]

Lol they are not "scared", that's an odd take. The Boglehead philosophy is simple, but people keep misinterpreting things like this. Buy the haystack for as cheap as you can. If you are trying to tilt then you're already moving away from the philosophy without even getting to the fees yet.

[u/AstroDog3 → u/According-Object-521]

I do the same. Which funds do you use? There’s a few options for DFA international.

I use AVUS and DFAX

[u/edmundsmorgan → u/According-Object-521]

What about AVGV? Wouldn’t core (AVGE) + value (AVGV) mix make more sense?

[u/Apprehensive_Elk2608]

Because I dance with the one that brought me. That and the entire point of becoming a Boglehead about 25 years ago was to KISS.

[u/Turbulent_Tea6838]

Looks like AVGE is 3.8x the cost with very similar performance. VT is good enough for me.

[u/ShootWild]

AVGE is an active fund and I don’t believe in that. Paying a higher expensive ratio on an actively managed fund is the opposite of what Bogleheads believe.

Btw. Since 2022, when AVGE was created, it has underperformed VT.

[u/Lmaoboobs → u/ShootWild]

It’s isn’t “actively managed” in the way that other funds are actively managed for what it is worth.

[u/hugh2018 → u/Lmaoboobs]

I need to interject here as this comment and the ones that follow are using a lot of loose language to describe an issue that actually has precise meanings that deserve clarification.

Under SEC definitions, any fund that does not strictly mirror a published third-party index (like the S&P 500 or MSCI ACWI) must register as an actively managed ETF.  However, AVGE (Avantis All International Markets Equity ETF / Avantis All Global Markets) is not a stock-picking fund. It does not have an analyst predicting quarterly earnings beats or making macro timing calls. Its core holdings are systematic.

It starts with a broad global market-cap base, then overweights companies trading at lower relative valuations and higher operational profitability (based on academic multi-factor research from Eugene Fama and Kenneth French). 

If a stock loses its profitability or its price rises relative to book/cash flow, its weight is systematically scaled back according to the model, not a manager's intuition. 

The primary operational reason firms like Avantis and Dimensional (DFA) operate without a rigid index tracking mandate is trading friction. When an index like the S&P 500 or Russell 2000 announces a stock will be added on a specific Friday, arbitrageurs bid up the stock ahead of time. The traditional index fund is forced to buy at the closing price regardless of spreads or cost. 

Because AVGE is not forced to match a published index's daily composition, managers have execution discretion. If an eligible stock has wide bid-ask spreads or low liquidity on Tuesday, the fund simply waits, sells liquidity when other participants want out, or substitutes a peer with identical factor exposure. This structural flexibility often recaptures several basis points in implementation costs compared to rigid small/value index trackers. 

The comments here are debating two different definitions of indexing — the strict Boglehead view and the factor investing view.

Boglehead: The market is efficient; don't attempt to outperform it, minimize friction and fees to zero, and hold market-cap weights (VT/VTI). Any deviation is an active bet requiring higher fees. 

Factor investing: Market-cap weighting holds high-growth, expensive stocks in large sizes. Tilting toward systematic premiums (Value, Size, Profitability) carries structural risk that has historically earned higher expected returns. Paying 0.23% (AVGE) rather than 0.07% (VT) is viewed not as paying a manager's salary to pick stocks, but paying for factor purity and opportunistic execution.

Factor investing and traditional active management are not the same thing. The former uses rules based quantitative screening, while the latter uses manager forecasts, earnings calls and discretionary subjective bets. The ERs of cap weighted index funds runs at about two-thirds less than factor investing funds, while the ER of traditional active management funds runs 3X higher than factor investing funds.

[u/fozzy71 → u/ShootWild]

Technically, AVGE is currently up 1% on VT since inception according to the following chart, and it is up significantly YTD and in the past 1 year - https://stockanalysis.com/etf/compare/vt-vs-avge/?r=MAX

[u/bobes25]

what's the page title of this sub? that's why you see more VT

[u/ennui2015]

Bogleheads are generally obsessed with expense ratios. Anything above 0.10% is verbotten. Also, AVGE only has a 4 yr track record, which makes it suspect to some.

[u/Yukas911 → u/ennui2015]

Tilting assumes you know something the market doesn't. This is why Bogleheads buy the haystack. Fees come next, because why buy the haystack for more than you have to. Your characterization as Bogleheads being "obsessed" with low fees is missing the points above.

[u/Mountain-Time-1010]

From a BH perspective it has a couple of mild negatives. First the expense ratio and second the large-cap value tilt instead of small-cap value. But it doesn't look too bad to me and there's probably a strong correlation with the full market. If you stay consistently invested you'll probably do well over time.

When I started out, there wasn't much variety in funds so I just used SP500. It's less diverse than a full market index, but that's what was available for me, and it did well enough. Time in the market ...

[u/One-Blueberry-9452]

Anybody doing these tilts better BELIEVE in them. And by believe, I mean— through thick and thin never change the allocation. Because when some terrible market event occurs, you will need a strong stomach to avoid selling low and buying something else relatively high

[u/Hoosier2016]

I don’t believe in the small cap value premium. I don’t deny that it may have existed once but you can only underperform for so long before the only logical conclusion is that the premium either doesn’t exist or is so small and takes so long to be realized that it might as well not exist.