How can the combo of S&P 500 and Small Cap Value be less risky than the S&P 500 by itself? (and other topics)

Paul Merriman and Chris Pedersen, Director of Research for The Merriman Financial Education Foundation, address a number of topics and questions:

• Is the combination of the S&P 500 and Small Cap Value really more risky than the S&P by itself?

• Why the exceptional performance of Chris’ Best In Class (BIC) during the first 6 months of 2022?

• If small and value outperformed large and growth, why did the Total Market Index underperformed the S&P 500 by more than 1%?

• Are the higher costs of the Avantis Funds likely to pay a higher premium than lower cost Vanguard funds?

• A first time investor, who has invested in Avantis Small Cap Value ETF “for life,” wants to know, “Can I plan on leaving it in this fund forever?”

• Jeff, a follower of our Foundation’s work, thanks us for our educational material but states that “the past results you spend so much time reviewing” have nothing to do with how he invests. Paul addresses who he thinks is actually keeping Jeff committed to his asset allocation.

• Is it better to own mid-cap funds instead of a combination of small- and large-cap funds? Paul and Chris each share their beliefs in response to this common question.

Much of this podcast/video is focused on a discussion of DFA and Avantis ETFs. Using both Portfolio Visualizer and Morningstar websites, Chris explains the major factor differences. (Podcast listeners: This section is more meaningful if viewed on the Youtube video).

Chris recommends Rob Burger’s video discussion of Avantis Small-Cap Value. https://www.youtube.com/watch?v=MdShSQcScsk

Rob Berger, lawyer, investor, podcaster, blogger and author of Retire Before Mom & Dad, is one of our Truth Tellers and we will be writing about him in the coming months. Since 2007, Rob has run the financial blog doughroller.net and contributed to Forbes, US News, AOL, and Business Insider and been featured in HuffPost.

For more on Chris’ research results for the first 6 months of 2022, see The Worst Bear Market Ever

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