Uncle Frank!!! Awesome recent episode on the BP Money Show, I have a follow up question!

You are confusing total small cap with small cap value and also confusing indices. And there is more than one CRSP index – in fact, there are at least nine.

AVUV is a small cap value fund, but does not use the CRSP small cap value index. It uses a proprietary index that includes a profitability and quality filter. So it is different than the three main small cap value indexes (CRSP, S&P and Russell.)

VB is not comparable to AVUV at all, because VB is a total small cap fund that includes both growth and value. SMALL CAP AND SMALL CAP VALUE ARE NOT THE SAME THING.

VBR is Vanguard's small cap value fund based on the CRSP small cap value index. VIOV is Vanguard's small cap value fund based on the S&P 600 small cap value index. So you would use those if you are comparing small cap value funds.

I would not use VB at all or any small cap growth in your portfolio due to its higher volatility and not so great reward characteristics.

I haven’t listened to the episode you’re asking about, but AVUV’s benchmark is the Russell 2000 Value Index and VB’s benchmark is the CRSP US Small Cap Index. AVUV’s focus then is both small and value while VB’s focus is only small. This means VB is a blend of growth and value.

You can see these differences if you look at the two funds’ factor profiles. Morningstar has great widgets to see a fund’s various factor tilts. The Stock Style and Factor Profile widgets show where a fund sits between small-cap and large-cap and where it sits between value and growth.

If we compare AVUV with VB, we see AVUV is more strongly small and more strongly value than VB. There’s some drift from small-caps into mid-caps in VB. Since VB is a blend, it will by design include small-cap growth which is a quadrant of the Stock Style widget you want to minimize because it tends to drag down performance. Avantis funds (AVUV) add an additional filter for profitability so their funds tend to perform better than funds that don’t filter for profitability.


VB is Small Cap Blend and AVUV is Small Cap VALUE. So right there big difference even though they both are tied to CRSP. AVUV also has a profitability factor which makes it premium vs other small cap value funds like VIOV and VBR.

If you’re in a IRA / 401k account then yes make the switch. If it’s in taxable account then you need to make that decision based on capital gains.

see in this comparison of AVUV with VB, VIOV, VBR and correlation against VUG. The point of holding SCV is to be uncorrelated with LCG.