Avantis® Emerging Markets Value ETF (AVES)

Avantis® Emerging Markets Value ETF (AVEM)

Profile: The Avantis® Emerging Markets Value ETF is a passively managed exchange-traded fund that seeks to track the investment results of the FTSE Emerging + Frontier Markets Value Factor Index. The ETF invests primarily in value stocks of companies located in emerging and frontier markets.

Investment Strategy:

AVEM employs a quantitative investment strategy that focuses on identifying and investing in undervalued companies in emerging and frontier markets. This strategy aims to capture the potential outperformance of value stocks over time. The ETF utilizes a proprietary scoring system that considers factors such as profitability, valuation, and momentum to select its holdings.

Objectives:

• To provide long-term capital appreciation.
• To outperform the broader emerging markets equity market over time.
• To offer investors exposure to undervalued companies in emerging and frontier markets.

Issuer:

• Name: Avantis Investors
• Reputation and Reliability: Avantis is a fairly new asset management firm, founded in 2019 by a team of seasoned investment professionals with experience at prominent firms such as Dimensional Fund Advisors and Goldman Sachs.
• Management: The management team has a strong track record in managing quantitative investment strategies.

Market Share:

AVEM is a relatively new ETF with a small market share in the emerging markets equity space. However, the ETF has experienced strong growth in its assets under management since its inception.

Total Net Assets:

As of October 26, 2023, AVEM has approximately $1.25 billion in total net assets.

Moat:

• Quantitative Investment Strategy: AVEM's quantitative investment strategy provides a systematic and objective approach to identifying undervalued stocks, potentially leading to outperformance.
• Experienced Management Team: The management team's experience in quantitative investing offers a competitive edge.

Financial Performance:

Since its inception in February 2021, AVEM has delivered strong returns, outperforming its benchmark index. However, it's important to note that past performance is not indicative of future results.

Growth Trajectory:

The growth trajectory for emerging markets equities remains positive in the long term, driven by factors such as increasing economic activity and rising disposable incomes in developing countries.

Liquidity:

AVEM has a relatively high average trading volume, indicating good liquidity. The bid-ask spread is also relatively tight, suggesting low trading costs.

Market Dynamics:

Key factors affecting AVEM's market environment include global economic growth, emerging market currencies, and investor sentiment towards emerging markets equities.

Competitors:

• iShares Core MSCI Emerging Markets ETF (IEMG)
• Vanguard FTSE Emerging Markets ETF (VWO)
• Xtrackers MSCI Emerging Markets Value Factor ETF (EMVL)

Expense Ratio:

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

Investment Approach and Strategy:

• Strategy: AVEM tracks the FTSE Emerging + Frontier Markets Value Factor Index, which represents a diversified portfolio of undervalued stocks in emerging and frontier markets.
• Composition: The ETF primarily invests in stocks, with a focus on value stocks.

Key Points:

• Invests in undervalued stocks in emerging and frontier markets.
• Employs a quantitative investment strategy.
• Experienced management team.
• Strong track record since inception.
• High liquidity and low expense ratio.

Risks:

• Volatility: Emerging markets equities can be more volatile than developed markets equities.
• Market risk: The value of AVEM's holdings could decline due to factors such as changes in economic conditions or investor sentiment.
• Currency risk: The value of AVEM's investments could be affected by fluctuations in emerging market currencies.

Who Should Consider Investing?

• Investors seeking long-term capital appreciation through exposure to undervalued emerging markets stocks.
• Fundamental Rating Based on AI:

Based on an AI analysis of AVEM's financials, market position, and future prospects, the ETF receives a 7 out of 10 rating. This indicates a strong overall fundamental profile, with potential for continued growth and outperformance.

Disclaimer:

This information is for general educational purposes and should not be considered financial advice. Please consult a licensed financial advisor before making any investment decisions.

Resources:

• Avantis Investors Website: https://avantispartners.com/
• ETF Database: https://etfdb.com/
• Morningstar: https://www.morningstar.com/