Capital Flows to Where it is Treated Best: ETFs Have Treated Investors Most Excellently (repost)

“Capital flows to where it is treated best.” Many of you have probably heard this quote more than once, and should easily understand it, even if you don’t embrace it as a universal truth. I like this quote because it just makes good common sense. The quote is normally used in the context of macro-economics, but I believe it is equally valid in the realm of actively managed mutual funds, index funds and ETFs.

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Best Long-Term Performance U.S. Small Cap Value ETFs 1.1

If you have been considering adding a U.S. Small Cap Value ETF to your portfolio, you have a lot to choose from. There are at least 17 ETFs to pick from in this category. In this article, I will show you how I came up with what I believe is the best ETF in this category for a well-balanced portfolio.

Before I go through that analysis, let’s first look at the long-term performance of the U.S. Small Cap Value asset class. This asset class has long been touted as a volatile yet lucrative place to build wealth over long periods of time. According to portfoliovisualizer.com, this asset class has returned 14.39% since 1972 vs the U.S. Large Cap Blend asset class which has returned 10.17%. Both are respectable returns but look at the effects of compounding on this chart below.

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