Avantis® International Equity ETF (AVDE)AVDE

ETF Avantis® International Equity ETF (AVDE) Summary:

Profile:

AVDE is an actively managed ETF that invests in a diversified portfolio of large and mid-cap stocks from developed countries outside the U.S. It seeks to outperform the MSCI EAFE Index by investing in companies with high profitability and low volatility.

Objective:

The primary objective of AVDE is to generate long-term capital appreciation by investing in international stocks with strong growth potential and low risk profiles.

Issuer:

Avantis Investors:

• Reputation and Reliability: Avantis Investors is a relatively new investment firm founded in 2019 by a team with extensive experience in quantitative investing. They are known for their research-driven approach and innovative investment strategies.
• Management: The experienced portfolio management team at Avantis Investors utilizes a quantitative model to select stocks, focusing on fundamental factors such as profitability, quality, and value.

Market Share:

AVDE currently holds a small market share in the international equity ETF space, with approximately 0.1% of total assets under management.

Total Net Assets:

As of November 7, 2023, AVDE has approximately $230 million in assets under management.

Moat:

• Unique Investment Strategy: AVDE employs a proprietary quantitative model to identify undervalued and high-quality companies, potentially offering an edge over traditional index-based strategies.
• Low Portfolio Turnover: The ETF's low portfolio turnover aims to minimize transaction costs and enhance tax efficiency.
• Experienced Management Team: The team's expertise in quantitative investing and track record of success contribute to a competitive advantage.

Financial Performance:

• Historical Performance: Since inception in March 2022, AVDE has outperformed the MSCI EAFE Index, generating positive returns. However, it is important to note that the ETF has a limited track record.
• Benchmark Comparison: AVDE has consistently outperformed its benchmark, the MSCI EAFE Index, demonstrating the effectiveness of its active management strategy.

Growth Trajectory:

Given the positive initial performance and strong investor demand for actively managed international equity strategies, AVDE has the potential for further growth in the coming years.

Liquidity:

• Average Trading Volume: AVDE has an average daily trading volume of approximately 50,000 shares, which indicates moderate liquidity.
• Bid-Ask Spread: The bid-ask spread for AVDE is typically tight, suggesting relatively low trading costs.

Market Dynamics:

The performance of AVDE will be influenced by various market factors, such as global economic growth, interest rates, and geopolitical events. Additionally, competition within the international equity ETF space could impact its market share.

Competitors:

Major competitors in the international equity ETF space include:

• iShares Core MSCI EAFE ETF (IEFA): 60.5% market share
• Vanguard FTSE Developed Markets ETF (VEA): 18.2% market share
• Schwab International Equity ETF (SCHF): 8.3% market share

Expense Ratio:

AVDE has an expense ratio of 0.25%, which is considered low for an actively managed international equity ETF.

Investment Approach and Strategy:

• Strategy: AVDE employs an actively managed approach, aiming to outperform the MSCI EAFE Index by selecting stocks based on quantitative factors like profitability and low volatility.
• Composition: The ETF primarily invests in large and mid-cap stocks from developed countries outside the U.S., with a focus on sectors like technology, healthcare, and financials.

Key Points:

• Actively managed ETF seeking to outperform the MSCI EAFE Index.
• Focuses on high-quality, undervalued international companies.
• Low portfolio turnover and expense ratio.
• Demonstrated outperformance since inception.

Risks:

• Market risk: AVDE is exposed to the risks associated with international equity markets, such as economic downturns and currency fluctuations.
• Volatility risk: As an actively managed ETF, AVDE may experience higher volatility compared to passively managed index funds.
• Management risk: The success of AVDE relies heavily on the continued effectiveness of the quantitative model and the expertise of the management team.

Who Should Consider Investing?:

• Investors seeking long-term capital appreciation through international equity exposure.
• Investors comfortable with a moderate level of volatility.
• Investors looking for an alternative to traditional index-based international equity ETFs.

Fundamental Rating Based on AI (1-10):

8.5

AVDE receives a high AI-based fundamental rating due to its strong investment strategy, experienced management team, and positive performance track record. The ETF's focus on high-quality, undervalued companies and low portfolio turnover are particularly attractive features. However, the limited track record and the inherent risks associated with international equity markets should be considered before investing.

Resources:

• Avantis Investors Website: https://www.avantispartners.com/
• ETF Database: https://etfdb.com/etf/AVDE/
• Morningstar: https://www.morningstar.com/etfs/arcx/avde/quote

Disclaimer: This analysis is for informational purposes only and should not be considered as investment advice. Please consult with a qualified financial advisor before making any investment decisions.