No. of Recommendations: 0
Does any one have any particular view/opinion on small cap indexes such as VBR.
At least relative to the S&P 500 it appear to be undervalued but not too clued up on whether this is justified or not. Perhaps more susceptible to recession, labour costs and higher rates than the large caps and so not as cheap as it looks on the surface?
No. of Recommendations: 2
VBR, the Vanguard Small-Cap Value fund/ETF, is a great investment option, IMO. It's big for a small-cap fund, though, so it's investment universe goes up into smaller mid-cap stocks as well.
Still, it has low turnover, low fees, and gives you great diversified exposure to US small cap value along with lower end mid-cap value.
It's more volatile than the S&P 500, but, IMO, this is one where you do expect better long term returns for your additional volatility. There is a history of small-cap value outperforming the S&P 500, and a reason to believe that should continue, given behavioral economics and valuation grounds. And in particular, IINM, valuation of small cap value stocks is even better compared to the SP500 than is usually the case, purely on a relative basis, see earlier posts on this board by me and Manlobbi.
No. of Recommendations: 2
Thanks. Essentially as of today the only ETF i hold is RSP. Small cap such as VBR looks on the surface attractive and I think has a decent chance of out performing the S&P 500 over the next 10 years. My only concern however is that while small cap are trading at some of the cheapest levels relative to large cap, they are also more leveraged than they have been.
