I will discuss fundamental investing on this site, so I can chronicle some of my adventures in stock picking. The vast majority of my marketable securities portfolio (modest though it is) is indexed. The majority of that money is in market capitalization weighted index funds (in retirement vehicles).
Yet, I am convinced of the merits of value investing and the persistence of the value factor. I will plan to post more on this in the future, with some links to better sources than this blog. If you can’t wait, you might go ahead start perusing:
http://www.researchaffiliates.com, http://www.alphaarchitect.com, or http://www.aqr.com.
The gap between value stocks and the market cap weighted indexes in foreign funds is larger than in the US and seems historically large. These markets also appear to be cheap relative to history and the U.S. Many would point out this is probably because these indexes are more heavily weighted to financial, mining and energy companies (which may all be facing obsolescence, or at least decreased margins due to US fracking and other technological advances) and the indexes are devoid of FAANGS/tech darlings.
I acknowledge these risks, but that is life as a value investor. As Joel Greenblatt of Gotham Asset Management says, “buy it cheap and something good might happen.” An example of this is what happened with U.S. banks over the last several years. They were cheap for good reason: they were going to be regulated into oblivion, rates would never move, and they would never earn their cost of capital. The narrative has since changed and the stocks have roared back.
I am also primarily exposed to U.S. assets, so foreign stocks should provide me with (modest) diversification benefits. So, I have decided to allocate some additional money to foreign value funds. As part of this process, I have been comparing some of the available foreign value ETFs. Continue reading “Best Foreign Value Factor ETFs”