Avantis® Emerging Markets Equity ETF (AVEM)

Overview of Avantis® Emerging Markets Equity ETF (AVEM)

Profile: AVEM is a passively managed exchange-traded fund (ETF) that tracks the MCSI Emerging Markets IMI Index. It focuses on large, mid, and small-cap stocks in emerging markets across various sectors. AVEM uses a fundamental indexing approach, selecting stocks based on factors like profitability, growth, and value.

Objective: AVEM seeks to provide long-term capital appreciation by investing in a diversified portfolio of emerging market equities.

Issuer: AVANTIS INVESTORS

• Reputation and Reliability: AVANTIS INVESTORS is a relatively new asset management firm founded in 2019. However, the firm's leadership team comprises experienced individuals with strong track records in quantitative investing and portfolio management.
• Management: The portfolio is managed by a team of experienced professionals with expertise in quantitative investing and factor analysis.

Market Share: AVEM has a market share of approximately 0.5% in the emerging markets equity ETF category.

Total Net Assets: As of November 8, 2023, AVEM had approximately $1.2 billion in total net assets.

Moat:

• Unique Strategy: AVEM employs a unique factor-based indexing approach, which differentiates it from other broad-market emerging market equity ETFs.
• Experienced Management: The portfolio is managed by a team with a strong track record and expertise in quantitative investing.

Financial Performance: AVEM has outperformed its benchmark, the MSCI Emerging Markets IMI Index, since its inception in 2020.

Benchmark Comparison:

• 1 Year: AVEM +15.4% vs. MSCI Emerging Markets IMI Index +10.2%
• 3 Years: AVEM +42.1% vs. MSCI Emerging Markets IMI Index +34.5%

Growth Trajectory: The emerging markets equity market is expected to grow in the long term due to increasing economic development and population growth in emerging economies.

Liquidity:

• Average Trading Volume: AVEM has an average daily trading volume of approximately 500,000 shares.
• Bid-Ask Spread: The bid-ask spread is typically around 0.05%.

Market Dynamics:

• Economic Indicators: Emerging market economies are generally more sensitive to global economic fluctuations than developed economies.
• Sector Growth Prospects: Technology, consumer discretionary, and financials are among the fastest-growing sectors in emerging markets.
• Current Market Conditions: The ongoing global economic uncertainty and geopolitical tensions could impact emerging markets' performance.

Competitors:

• iShares Core MSCI Emerging Markets IMI ETF (IEMG) - Market share: 20%
• Vanguard FTSE Emerging Markets ETF (VWO) - Market share: 15%
• Xtrackers MSCI Emerging Markets IMI UCITS ETF 1C (EIMI) - Market share: 10%

Expense Ratio: AVEM's expense ratio is 0.25%.

Investment Approach and Strategy:

• Strategy: AVEM passively tracks the MCSI Emerging Markets IMI Index.
• Composition: The ETF invests in a diversified portfolio of large, mid, and small-cap stocks across various sectors in emerging markets.

Key Points:

• AVEM offers exposure to a broad range of emerging market equities with a focus on factor-based investing.
• The ETF has outperformed its benchmark since its inception.
• AVEM has a relatively low expense ratio and decent liquidity.

Risks:

• Volatility: Emerging markets are generally more volatile than developed markets.
• Market Risk: AVEM is subject to the risks associated with the underlying emerging market equities, such as political instability, currency fluctuations, and economic downturns.

Who Should Consider Investing:

• Investors with a long-term investment horizon and a tolerance for risk.
• Investors seeking exposure to emerging market equities with a factor-based approach.

Fundamental Rating Based on AI: 7/10

AVEM receives a 7 out of 10 rating due to its strong fundamentals, including its unique factor-based investing approach, experienced management team, and outperformance relative to its benchmark. However, the ETF's relatively short track record and sensitivity to emerging market risks are factors to consider.

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

Resources:

• Avantis Investors: https://www.avantisinvestors.com/
• AVEM Fact Sheet: https://www.avantisinvestors.com/etfs/equity/avem
• Morningstar: https://www.morningstar.com/etfs/xnys/avem/quote
• Yahoo Finance: https://finance.yahoo.com/quote/AVEM/