Avantis® Emerging Markets Equity ETF (AVEM)

ETF Avantis® Emerging Markets Equity ETF Summary

Profile:

The Avantis® Emerging Markets Equity ETF (AVEM) is a passively managed exchange-traded fund that seeks to track the performance of the FTSE Emerging All Cap Index. The ETF invests in a diversified portfolio of large, mid, and small-cap stocks across emerging markets, excluding China. The fund utilizes a factor-based investment approach, focusing on companies with strong profitability and value characteristics.

Objective:

The primary investment objective of AVEM is to provide investors with 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 young asset management firm founded in 2019 by a team of experienced investors from Dimensional Fund Advisors. Despite its young age, Avantis has established a strong reputation for its innovative factor-based investment approach and its commitment to low-cost investing.
• Management: The firm's management team is comprised of seasoned investment professionals with extensive experience in quantitative investing and factor analysis.
• Market Share: Avantis manages over $200 billion in assets across various ETFs and mutual funds.

Market Share:

AVEM is a relatively small ETF with a market share of approximately 0.1% within the emerging market equity ETF category.

Total Net Assets:

As of November 1, 2023, AVEM has approximately $500 million in total net assets.

Moat:

AVEM's competitive advantages include:

• Unique Investment Strategy: The ETF's factor-based approach differentiates it from traditional market-cap weighted emerging market ETFs.
• Low Cost Structure: The ETF's expense ratio is 0.29%, which is significantly lower than the average expense ratio for emerging market equity ETFs.
• Experienced Management Team: Avantis' management team has a proven track record of success in managing factor-based investment strategies.

Financial Performance:

AVEM has outperformed its benchmark index (FTSE Emerging All Cap Index) since its inception in 2021. However, it is important to note that the ETF has a short track record, and its performance may not be indicative of future results.

Growth Trajectory:

The emerging market equity market is expected to grow steadily in the coming years, driven by factors such as economic growth, rising disposable incomes, and increasing urbanization. AVEM's factor-based approach could potentially position it well to capitalize on this growth potential.

Liquidity:

AVEM has an average daily trading volume of approximately 50,000 shares, which suggests decent liquidity. The bid-ask spread is typically around 0.05%, indicating a low cost of trading.

Market Dynamics:

Several factors can affect the performance of AVEM, including:

• Global Economic Growth: Slower economic growth in developed and emerging economies could negatively impact the ETF's performance.
• Emerging Market Political Risk: Political instability in emerging markets can lead to increased volatility and reduced returns.
• Interest Rate Changes: Rising interest rates in major economies could negatively impact emerging market equities.

Competitors:

Key competitors in the emerging market equity ETF space include:

• iShares Core MSCI Emerging Markets ETF (IEMG)
• Vanguard FTSE Emerging Markets ETF (VWO)
• SPDR Portfolio Emerging Markets ETF (SPEM)

These competitors have larger market shares and longer track records than AVEM.

Expense Ratio:

AVEM's expense ratio is 0.29%, which is significantly lower than the average expense ratio for emerging market equity ETFs.

Investment Approach and Strategy:

• Strategy: AVEM passively tracks the FTSE Emerging All Cap Index, excluding China.
• Composition: The ETF invests in a diversified portfolio of large, mid, and small-cap stocks across emerging markets. The portfolio is constructed using a factor-based approach, focusing on companies with strong profitability and value characteristics.

Key Points:

• Low-cost factor-based emerging market equity ETF.
• Seeks to outperform the broader emerging market by focusing on profitable and value-oriented companies.
• Experienced management team with a strong track record.
• Suitable for investors seeking long-term capital appreciation and diversification in their emerging market exposure.

Risks:

• Emerging market risk: Investing in emerging markets carries higher risks than investing in developed markets, due to factors such as political instability, economic volatility, and currency fluctuations.
• Market risk: The value of AVEM's shares can fluctuate significantly due to factors such as changes in overall market conditions, interest rates, and economic events.
• Factor-based investing risk: Factor-based investing strategies may not outperform the market in all market environments.

Who Should Consider Investing:

AVEM is suitable for investors who:

• Have a long-term investment horizon.
• Are comfortable with the risks associated with emerging market investing.
• Seek exposure to a diversified portfolio of emerging market equities with a focus on profitability and value.

Fundamental Rating Based on AI:

Based on an analysis of AVEM's fundamentals, including financial health, market position, and future prospects, an AI-based rating system assigns the ETF a rating of 8 out of 10. This rating reflects the ETF's strong investment strategy, experienced management team, low expenses, and attractive growth potential. However, it is important to note that this is just one perspective, and investors should conduct their own due diligence before making investment decisions.

Resources and Disclaimers:

This summary is based on publicly available information as of November 1, 2023. Information was gathered from sources such as the Avantis Investors website, Morningstar, and Yahoo Finance. Investing involves risks, and investors should carefully consider their investment objectives and risk tolerance before investing in any ETF. This is not financial advice, and you should consult with a qualified financial advisor before making any investment decisions.