Exchange-Traded Funds For Canadians For Dummies

Chapter 8

Small Value: Diminutive Dazzlers

In This Chapter

Praising the return king of all stock styles

Factoring in mid caps

Look at the list of some of the top companies represented in the Vanguard Small Cap Value ETF: First Niagara Financial Group, Camden Property Trust, Beazer Homes USA, Corn Products International. . . . These are not household names. Nor are they especially fast-growing companies. Nor are they industry leaders. Nor is there much excitement to be seen in companies such as Corn Products International. (“Our starches, sweeteners and other ingredients are used by our customers to provide everything from sweetness, taste and texture to immune system support, fat replacement and adhesive strength.”) As you go farther down the list of holdings, you’ll likely find some companies in financial distress. Others may be facing serious lawsuits, expiration of patents, or labour unrest. If you wanted to pick one of these companies to sink a wad of cash into, we would tell you that you’re crazy.

But if you wanted to sink that cash into the entire small value index, well, that’s another matter altogether. Assuming you could handle some risk, we’d tell you to go for it. By all means. Your odds of making money are pretty darned good — at least if history is our guide.

Don’t ...