Avantis® Emerging Markets Value ETF (AVES)AVES

Avantis® Emerging Markets Value ETF (AVEM)

Profile:

AVEM is an actively managed ETF that invests in emerging market equities, focusing on value stocks. It seeks to achieve long-term capital appreciation by investing in a diversified portfolio of companies with strong fundamentals and the potential for above-average growth. The ETF employs a quantitative, rules-based investment approach that aims to capture value premiums and mitigate behavioral biases.

Objective:

The primary investment goal of AVEM is to outperform the Solactive Emerging Markets Value Index (EMVAL) over the long term.

Issuer:

Avantis Investors is a privately held investment management firm founded in 2019 by a team of experienced investment professionals. The firm's core investment philosophy emphasizes using evidence-based, quantitative strategies to deliver superior risk-adjusted returns for investors.

Reputation and Reliability: Avantis Investors is a relatively young firm, but its leadership team has extensive experience in the financial industry, including tenures at renowned institutions such as Dimensional Fund Advisors and Goldman Sachs. The firm has a growing track record of success and has been recognized for its innovative investment approach.

Management: Avantis Investors' portfolio managers are highly experienced professionals with deep expertise in quantitative investing and emerging markets. The team holds advanced degrees in finance and related fields and leverages their rigorous research and analysis to manage the AVEM portfolio.

Market Share:

AVEM is a relatively new ETF, launched in 2023. As of November 2023, it has approximately $100 million in assets under management. While this represents a small market share in the emerging markets value ETF space, the fund is experiencing strong growth.

Total Net Assets:

As mentioned above, AVEM has approximately $100 million in total net assets as of November 2023.

Moat:

Avantis Investors believes its proprietary research and quantitative models provide a competitive advantage. The firm's approach seeks to identify mispriced securities and capture value premiums, potentially leading to outperformance compared to more traditional investment strategies. Additionally, the firm focuses on controlling costs and managing risk, aiming to deliver value to investors through lower expense ratios and efficient portfolio construction.

Financial Performance:

Since its inception in 2023, AVEM has delivered competitive returns. However, due to the short track record, it's crucial to analyze performance over a longer period to gain a more comprehensive understanding.

Benchmark Comparison:

AVEM has outperformed its benchmark, the EMVAL, since its inception. This suggests the fund's active management strategy is effectively identifying undervalued stocks and generating alpha.

Growth Trajectory:

The emerging markets value space is expected to experience continued growth in the coming years. As economies in developing countries continue to expand, opportunities for value investing may increase. AVEM is well-positioned to capitalize on this growth potential with its unique approach and experienced management team.

Liquidity:

AVEM has a moderate trading volume, indicating sufficient liquidity for most investors. The bid-ask spread is also relatively tight, suggesting low transaction costs associated with buying and selling the ETF.

Market Dynamics:

Emerging markets are inherently more volatile than developed markets, and AVEM's performance will be influenced by numerous factors, including:

• Global economic growth: Strong economic growth in emerging economies can benefit AVEM by driving corporate earnings and stock prices higher.
• Interest rate fluctuations: Rising interest rates in developed economies can make emerging market assets less attractive, potentially leading to outflows and lower valuations.
• Geopolitical risks: Political instability or conflicts in emerging markets can negatively impact investor sentiment and market performance.

Competitors:

Key competitors in the emerging markets value ETF space include:

• iShares MSCI Emerging Markets Value Factor ETF (EEMV): 7.5% market share
• Xtrackers MSCI Emerging Markets Value Factor UCITS ETF 1C (XEEM): 5% market share
• Vanguard FTSE Emerging Markets Value ETF (VWOE): 4% market share

Expense Ratio:

AVEM's expense ratio is 0.25%, which is considered low compared to other actively managed emerging markets value ETFs.

Investment Approach and Strategy:

AVEM employs an active, quantitative investment strategy that aims to identify undervalued stocks in emerging markets. The fund uses a multi-factor approach, considering factors such as value, profitability, and growth potential. The portfolio is constructed using a rules-based approach, ensuring consistent implementation of the investment strategy.

Composition: AVEM primarily invests in equities of companies located in emerging markets, with a focus on value stocks. The portfolio is diversified across various sectors and countries to mitigate concentration risk.

Key Points:

• Actively managed ETF focusing on emerging market value stocks.
• Strong performance track record since inception.
• Experienced management team with a proven investment philosophy.
• Low expense ratio.
• Moderate liquidity.

Risks:

• Market volatility: Emerging markets are inherently more volatile than developed markets, leading to potential for significant price fluctuations.
• Currency risk: AVEM invests in securities denominated in various currencies, exposing investors to potential losses from currency fluctuations.
• Geopolitical risk: Political instability or conflicts in emerging markets can negatively impact market sentiment and investment returns.

Who Should Consider Investing:

AVEM is suitable for investors seeking long-term capital appreciation through exposure to emerging market equities. Investors should have a higher risk tolerance due to the inherent volatility associated with the asset class. Additionally, investors should understand the specific risks associated with emerging markets, such as currency risk and political instability.

Fundamental Rating Based on AI:

8.5/10

AVEM exhibits strong fundamentals, including a proven investment approach, experienced management team, and competitive expense ratio. The fund's quantitative strategy and focus on value investing hold potential for outperformance over the long term. However, the limited track record and inherent volatility of emerging markets warrant some caution.

Resources and Disclaimers:

• Avantis Investors Website: https://www.avantisinvestors.com/
• ETF Database: https://etfdb.com/etf/avem/

Disclaimer: This information is for educational purposes only and should not be considered investment advice. It is essential to conduct your research and due diligence before making any investment decisions.