Even ten years is not a particularly long time frame, unfortunately. Brokers can extend leverage, but I think itâs good FT doesnât do this. The leveraged ETFs are very risky, as they are designed for 1 day holding periods. They are reset each day, so after 1 year letâs say, it doesnât mean if SPY has gone up 50, they have gone up 100. Check out Ben Felix and MoneyWeek on YouTube for more.
With active managers, I think the quarterly targets donât help, but mostly itâs that stock picking is really hard.
Currently there is etfs for:
FTSE global value
Msci world small cap
Msci world momentum
Interested to see Quality and volatility options added
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Good find on the FTSE Value. in the KIID it mentions that it is actively managed which is strange as the expense ratio is 0.22% which would be very low for an active fund, but I guess it is following some basic rules close to an index.
So basically there was no consistency, except maybe defensive stocks unferperforming.
Well letâs say infinite timeframe. Iâve read pieces on holding leveraged ETFs long term, it can work in some instances. Iâm tempted to invest a little bit and leave it and see what happens.
I am tempted to do the same. Here is a plot of QLD, a 2x ETF tracking the Nasdaq 100 QQQ, and Nasdaq QQQ itself, going back to 2006.
However, that noise between 2006 and 2011 actually looks like this:
You have to have the stomach for a -150% swing, and not sell.
All charts from Koyfin, itâs free.
Yeah, Iâm not really keen on picking up anything leveraged at the moment. We are at ATHs again after a 12+ year bull run, except now everyone is loaded up on debt and we are looking at elevated levels of unemployment in the near future.
I have actually picked up some FTSE Global Value to re-balance my portfolio, my major non-index holdings (Google, AMD, Amazon) have shifted it away and I want to keep more balanced risk exposure. It feels like every asset class is crazy expensive at the moment, so perhaps value stocks arenât such a big increase in risk.
Would really like to see the USSC and EUSV small cap value weighted ETFs added.
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What worries me about the general area of ETFs and all its latest developments regards the number of indices or indexes (and also ETFs) that are available, see for instance this article 70 times more stock market indices than listed stocks. While the articles makes it clear that there are only (compared to indices) about 5,000 EFTs out there, probably more now, compared to about 43,000 public companies it is still a huge number. In the end the odds of picking the right index are probably similar to the odds of picking the right company. I do like a simple and cheap ETF that tracks a standard index, however, I am not in favour of mountains of extra complexity.
Having said that, an ETF tracking something that is hard to access as an investor is of course also a great benefit, commodities are a good examples here where there is a clear benefit.
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Thanks for sharing. Interesting and ridiculous fact. It does not have much to do with ETFs though but with benchmarking. To me, this basically says that investment companies/managers make up thousands of their own indices so they can find benchmarks that they have performed well against. 
I would agree that there are an excessive number of ETFs with very dubious value. There are also plenty of âfactorâ indices which in my opinion are absolute junk (e.g. dividend yield weighted ETFs, really?). Also if 100 fund managers want to set up ETFs that all track the same index, who cares? More competition is better value for investors.
That fact does not detract in any way from the indices targeting well documented and logical risk factors.
A good litmus test is can you create a logical thesis in a couple of sentences why a certain risk factor could have returns beyond the market.
The quality factor highlights higher-quality, less cyclical, lower leverage companies with above-average yields: these are defensive stocks that are likely to underperform in a rising market but which offer better protection in a downturn.
The Value factor focuses on distressed stocks, which are relatively risky but which offer the potential of large price gains in a recovery.
Iâm glad that Iâm able to access the Small Cap and Value risk factors for a more aggressive portfolio without taking on the uncompensated risk of stock picking.
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Definitely agree with this!
This is what frustrate me about FT and the short term investing craze generally, there is a clear evidence of small and value premium in the long run (FF Three factor model) and these two are only available ETFs in the Europe at this time (although EUSV has now been delisted from LSE and only available through Paris) - that caters to this two factor combination. Obviously hottest growth stocks are a priority for this platform 
, rather than ones that research have shown to work in the long term.
Even if FT adds these, these will be available as plus (as these are from State Street) and so will be from Dimensional or Avantis if they ever get offered as UCITS. This alone made me consider T212
Why not build your own factor based investing portfolio?
There are tools out there that make this process easy.
I switched to a factor based investing approach in 2013 and it transformed my returns.
I invite all investors to answer these questions honestly âŚ
-
Can I really ⌠and I mean really evaluate the quality and value of businesses from a variety of industries and sectors?
-
Are you able to contextualise the said business in relation to its competitors, its products to those of its competitors, technology, IP etc.
I know when I finally found factor based investing approaches I was able to hold my hand up and admit that I couldnât do that but using tools that evaluate factors of quality, value, momentum and growth allowed me to follow a process that was mine ⌠rather than listening to âtipsâ or the latest âhot stocksâ on forums.
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Very interesting, could you elaborate on the tools you use and your factor investing method?
Just spotted the YT page in your bio 
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Hi Cameron.
I am reading bits of this thread v v late. I am very interested in topics such as this and would be keen to try to keep it going.
In respect of the numbers you posted above, a few observations:
- The past ten years+ we have been in the same bull market and havent seen a full economic cycle. Possibly stands to reason therefore that Momentum wins hands down in an environment such as this?
- Similarly, value stocks are always going to underperform in such an environment surely?
- The interesting one for me, and given that you have 10y ann. returns, would be the comparison of 1,3,5,10y annualised volatility of the minimum volatility versus World. if you can essentially match/mildly outperform the index over ten years with potentially substantially less volatility, then this is something well worth looking at in my opinion.
Any data that you have to hand on this at all? If you have MoM returns for past 10 years etc, I am happy to do the numbers (for Min Vol and MSCI World). Let me know your thoughtsâŚ
Phil. Would love for you to expound a little more please boss.
Agree with all of your thoughts here. ExceptâŚ
Personally I think there is nothing wrong with a punt, but this should be in an amount commensurate with betting on the Grand National as far as I am concerned
Yup thatâs right (although the trend has shifted in the last ~6months). Interest rates are a big factor as well, high interest rates = greater discounting of future earnings, which favours value. Obviously weâve been in a low interest rate environment for some time so investors are willing to look much further into the future for earnings.
I donât think I have exactly what you asked for, but apparently min vol has ~30% lower volatility than the broad index (which as expected has resulted in a better risk-adjusted return in recent history)
https://www.msci.com/documents/10199/f52dfd02-9657-40f7-97eb-dacf4aa9771f
Thanks Cameron. I will try to find the time to take a look at that link you forwarded and to see whether I can dig out some of the data required.
Agree with you that there has been a shift in trend over the past few months. I think there is definitely scope for some pretty wholesale sector rotation (going out vs staying in basically) as we come out of the pandemic. Please let us come out of this pandemicâŚwhatever it brings next
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