I have flip flopped back and forth pretty bad on small cap value. You can see my previous post on it.
I thought of a different angle to it. If I were to tilt my portfolio outside of VTI and VXUS I would at most do 30% in small cap value / factor tilts. Let's say I get and extra 1% to 2% return on that 30% tilt. I would basically be adding 0.3% to 0.6% more to my returns. Not to mention most of these fund typically charge 0.3% to 0.4% expense ratios, like DFSV, AVUV, AVDV, etc. if you are effectively paying ~30 basis points more to get 1% extra return the math gets even tighter.
This just feels like a lot of work to maybe add less than a percentage point to my returns.
I just don't think that adding these super specific funds are really what make or break your FI journey. I think living below yours means and enjoying the journey along the way is the best way to go. I think the factor style of investing is genuinely interesting, but if there is any more outperformance left in it I doubt it will be anything more than 1% or 2%.
I believe small cap value will roughly track the S&P 500 and be more volatile and offer a similar total return. If had to bet my money on it I think small cap value will outperform while the CAPE is high and underperform when the CAPE comes back down.
