Avantis® Emerging Markets Equity ETF (AVEM)

Overview

The Avantis Emerging Markets Equity ETF (AVEM) seeks long-term capital appreciation by investing in a broad range of emerging market companies, emphasizing those with higher profitability and value characteristics.

Reputation and Reliability

Avantis Investors is a relatively new firm but is led by experienced investment professionals with a strong track record in quantitative investing and low-cost ETF management.

Management Expertise

The management team is composed of seasoned professionals with extensive experience in factor-based investing, especially those previously at Dimensional Fund Advisors (DFA).

Goal

To seek long-term capital appreciation by investing in a diverse portfolio of emerging market equities.

Investment Approach and Strategy

Strategy: The ETF employs a multi-factor model to identify and invest in emerging market companies with characteristics associated with higher expected returns, such as profitability and value.

Composition The ETF primarily holds stocks of companies located in emerging market countries. It may also invest in derivatives and other investment companies.

Market Share: AVEM's market share within the emerging market equity ETF sector is growing but remains a fraction of larger established competitors.

Total Net Assets (AUM): 4650000000

Key Competitors

• Vanguard FTSE Emerging Markets ETF (VWO)
• iShares Core MSCI Emerging Markets ETF (IEMG)
• Schwab Emerging Markets Equity ETF (SCHE)

Competitive Landscape

The emerging markets ETF space is dominated by large, low-cost index trackers. AVEM differentiates itself through its factor-based approach, which aims to outperform traditional market-cap-weighted indexes. Advantages include potential for higher returns due to factor tilts, while disadvantages include higher expense ratio compared to purely passive funds and potential for underperformance if factor tilts are not rewarded.

Historical Performance: Past performance is not indicative of future results. Consult official fund documentation for performance history.

Benchmark Comparison: The ETF's performance should be compared against benchmarks like the MSCI Emerging Markets Index to assess the value added by its factor-based strategy.

Expense Ratio: 0.23

Average Trading Volume

AVEM has a reasonable average trading volume, ensuring relatively easy entry and exit for most investors.

Bid-Ask Spread

The bid-ask spread is generally tight, which indicates good liquidity and lower transaction costs.

Market Environment Factors

Emerging market equities are sensitive to global economic growth, commodity prices, currency fluctuations, and geopolitical risks. Changes in these factors can significantly impact AVEM's performance.

Growth Trajectory

AVEM's growth depends on its ability to deliver competitive returns relative to its benchmark and attract investor interest in its factor-based approach. Changes may include periodic portfolio rebalancing and adjustments to factor exposures.

Competitive Edge

AVEM's competitive edge lies in its factor-based approach that targets higher profitability and value companies in emerging markets. This systematic approach, combined with a low expense ratio compared to actively managed funds, offers investors a cost-effective way to gain exposure to emerging markets with the potential for outperformance. The experienced management team further strengthens its competitive position. The ETF seeks to capture the benefits of value and profitability factors in a diversified portfolio.

Volatility

Emerging market equities are generally more volatile than developed market equities. AVEM's volatility will be influenced by the underlying market conditions and the specific characteristics of the companies it holds.

Market Risk

AVEM is subject to market risk, including economic, political, and currency risks specific to emerging markets. Fluctuations in these factors can negatively impact the ETF's value.

Ideal Investor Profile

The ideal investor is one who is seeking long-term capital appreciation, willing to accept higher volatility associated with emerging markets, and believes in the potential for factor-based investing to enhance returns.

Market Risk

AVEM is suitable for long-term investors seeking diversified emerging market exposure with a tilt towards value and profitability. It may not be suitable for active traders due to its investment strategy and expense ratio.

The Avantis Emerging Markets Equity ETF (AVEM) offers investors exposure to a diversified portfolio of emerging market companies with a focus on those exhibiting higher profitability and value characteristics. Its factor-based approach distinguishes it from traditional market-cap-weighted ETFs, potentially leading to higher returns. However, it is subject to the inherent risks of emerging market investing and has a slightly higher expense ratio compared to broad market index funds. The ETF is suitable for long-term investors seeking capital appreciation and comfortable with emerging market volatility.

Data Sources:

• Avantis Investors Website
• ETF.com
• Morningstar
• Bloomberg

Disclaimers:

This analysis is for informational purposes only and does not constitute financial advice. Investment decisions should be based on individual circumstances and after consulting with a qualified financial advisor. Past performance is not indicative of future results.