A Small Cap Value Purchase

I've been looking for places to deploy cash and decided to buy a Small Cap Value ETF today.  Here's why:

• It's generally accepted that there are higher returns (as well as higher risk) associated with small cap and value, and smaller and value-er the better - here's the data from 1927 to 2005.  
• Due to holding a large amount of unvested options and RSUs in a Fortune 500 company, I'm already heavily exposed to large cap market returns.  This is a Slice and Dice addition which will hopefully have returns that aren't totally correlated to the S&P 500.
• I'm not sure about this yet, but it seems that even if you wanted to invest in the Total Market without Tilting, making individual purchases in different market segments could enable more Tax Loss Harvesting.
• Lastly, the markets were down today.  Market timing is probably silly, but it still feels better to buy on a down day.  I don't know what the price will be tomorrow, but at least I paid less than whoever bought it yesterday.

Okay, so assuming that I wanted Small Cap Value, which one?  The default choice would be something from Vanguard, and they have a Small Cap Value ETF, but I wanted something smaller and value-er.

Vanguard Small Cap Value ETF

The consensus seems to be that Guggenheim S&P Smallcap 600 Pure Value offers the greatest tilt towards Small Cap and Value, so I picked that one.  The expense ratio certainly isn't as low as Vanguard's, but at .36% it's still quite reasonable.  

Guggenheim S&P Smallcap 600 Pure

I also found this interesting comparison of various small cap value funds, including recommendations for both taxable and tax advantaged accounts.

The one red flag in all of this is that RZV is tiny in terms of net assets, which means lower volume (higher bid/ask spreads) and a non-trivial risk that the ETF may be completely shut down.  Hopefully once everyone reads this blog entry they'll run out and buy it, and this problem will go away.  :)