Been listening to a bit of Ben Felix on youtube recently. He sounds like a smart guy and talks about a lot of what sounds like well researched stuff around asset allocation, and makes it sound very scientific and shit. He makes it sound like his diversification among the different factors would result in a better risk/return profile and potentially better returns, and it comes out to something like this:
42% U.S. Stock Market
24% International (ex-US) Developed Markets
12% Emerging Markets
14% U.S. Small Cap Value
8% International (ex-US) Small Cap Value
I back tested this and got the below results. Looks like it hasn't performed well over the past 5 years, though in his results, it looked like it performed well as of a couple years ago. I'm assuming most of that is because the US markets have been on a tear.
https://i.imgur.com/5Uej8nn.jpeg
So any thoughts on his methodology? Do you think factor investing is useful if it under performs for long periods? Will it eventually lead to better returns? Is there a better asset allocation?
Edit: Good lord, I wouldn't have expected this subject to cause people to be so ornery
