As a beginning investor I am looking for ways to built wealth for the extremely long term (50 years). I planned to just put money in the s&p500 monthly, but I learned about small cap value + momentum being theoretically more rewarding. This lead me into a rabbit hole of finding academically proven strategies to increase the geometric mean. Based on what I learned I decided on a very disciplined approach that tries to do just that. This post is for people that find it interesting to look at, but any judgement/advices is also welcome of course. My strategy is the following:
Average ROI of US SCV ETF + World SCV ETF on time period of 12 – 1 months gets compared to average ROI of US momentum ETF + World momentum ETF on time period of 12 – 1 months.
The higher one gets a weight of 70.
This is the dynamic factor allocation (relative performance between the factors, cross-factor momentum).
The ETF’s are:
ZPRV on IBIS 2 (German stock exchange) on IBKR
IWMO on BVME.ETF (Italian stock exchange) on IBKR
ZPRX on IBIS 2 (German stock exchange) on IBKR
IUMO on LSEETF (English stock exchange) on IBKR
All 4 accumulating and IE-domicile.
Monthly contributions of €750 (at first, might increase when financial situation changes) with cashflow rebalancing to get as close as possible to an allocation of 70/30 or 30/70 between the factors (SCV and momentum). Realistically between 20-40 and 60-80 is fine. Within the factors the allocation should stay close to 50/50, but +-10 difference is fine.
Yearly rebalancing on fixed date (my birthday) if necessary.
When monthly contributions and total portfolio become significantly high, I will start thinking about adding light leverage and a trend overlay.
EDIT: based in Europe.