Five Factor Investing with ETFs (EP.129)

<p>After months of research, number-crunching, and receiving listener requests on the subject, today’s episode is devoted to introducing our new model ETF portfolios — which promise to  offer a smoother ride to getting reliable returns. We open our conversation with a financial news roundup and by touching on our book of the week. We then dive into the theory behind our model by first exploring how market assets are priced. We discuss historical views on asset pricing models before looking at what academia has done to overcome challenges to the idea of market efficiency. Host Benjamin Felix methodically shows how our model addresses the five systematic risk factors that are included in the Fama-French Five-Factor Model. From emerging markets to stock size, we share insights into what our model accounts for and how this should impact your portfolio distribution and premium expectations. After reflecting on how factor-loaded indexes get higher returns without extra risk, we talk about the ETFs that we use for factor exposure, as well as how you can apply our findings to your portfolio. We round-off today’s show by chatting about the latest bad financial advice. Tune in to hear more about our findings in this, our last episode of 2020.</p> <p> </p> <p><strong>Key Points From This Episode:</strong></p> <ul> <li>We share community and listener feedback and what you can expect from the show in 2021. <strong>[0:00:15]</strong></li> <li>Hear about <em>The Almanack of Naval Ravikant</em>, our book of the week. <strong>[0:04:35]</strong></li> <li>Relooking at the drive towards personalized portfolios. <strong>[0:07:28]</strong></li> <li>Insights into S&P 500 stocks having a greater dividend yield than the US Treasury. <strong>[0:08:52]</strong></li> <li>How ETFs are coming to dominate Wall Street. <strong>[0:09:56]</strong></li> <li>Dying without a will; exploring the case of Zappos CEO Tony Hsieh. <strong>[0:11:05]</strong></li> <li>Introducing today’s portfolio topic — our new model portfolios, and why index funds make s