American Century ETF Trust - Avantis Inflation Focused Equity ETF (AVIE)

American Century ETF Trust - Avantis Inflation Focused Equity ETF (AVID)

Profile

Focus: AVID is an actively managed exchange-traded fund (ETF) that seeks to outperform the S&P 500 Index by investing in US large-cap stocks with the potential to outperform during inflationary periods. It utilizes Avantis Investors' Inflation Focused Equity strategy.

Asset allocation: The ETF primarily invests in US large-cap equities across various sectors, with a focus on companies exhibiting characteristics historically associated with outperformance during inflationary environments.

Investment Strategy: AVID employs a quantitative approach to identify stocks with specific financial characteristics, such as high profitability, low financial leverage, and strong pricing power, which are believed to be more resilient during inflationary periods.

Objective

The primary investment goal of AVID is to provide long-term capital appreciation by investing in a portfolio of US large-cap stocks that are expected to outperform during inflationary periods.

Issuer

American Century Investments: A leading global asset manager with over $270 billion in assets under management. The firm has a strong reputation for its investment expertise and commitment to client service.

Reputation and Reliability: American Century Investments enjoys a positive reputation in the industry, receiving high marks for its investment performance, client service, and corporate social responsibility.

Management: The ETF is sub-advised by Avantis Investors, a quantitative investment management firm with a strong track record of success. Avantis' team has extensive experience in developing and managing inflation-focused investment strategies.

Market Share and Assets

Market Share: AVID has a relatively small market share within the broader US large-cap equity ETF space. However, it has experienced significant growth in its assets under management since its inception in 2022.

Total Net Assets: As of October 27, 2023, AVID has approximately $1.2 billion in total net assets.

Moat

Competitive Advantages:

• Unique Strategy: AVID's actively managed approach and focus on inflation-resistant stocks differentiate it from passively managed large-cap ETFs.
• Experienced Management: The ETF benefits from the expertise of Avantis Investors, a firm with a proven track record in managing inflation-focused strategies.
• Niche Market Focus: AVID targets a specific segment of the market, potentially offering investors exposure to a unique opportunity.

Financial Performance

Historical Performance: AVID has delivered strong returns since its inception, outperforming the S&P 500 Index. However, it's important to note that the ETF has a limited track record.

Benchmark Comparison: AVID has consistently outperformed the S&P 500 Index, demonstrating the effectiveness of its inflation-focused strategy.

Growth Trajectory

AVID has witnessed significant growth in its assets under management, indicating increasing investor interest in its inflation-focused approach. This trend suggests potential for continued growth in the future.

Liquidity

Average Trading Volume: AVID has a moderate average trading volume, ensuring sufficient liquidity for most investors.

Bid-Ask Spread: The bid-ask spread is relatively tight, indicating low trading costs.

Market Dynamics

Factors Affecting the Market: Economic indicators, inflation levels, interest rate policies, and sector performance significantly impact AVID's market environment.

Competitors

Key competitors in the US large-cap equity ETF space include:

• Schwab US Large-Cap ETF (SCHX)
• iShares CORE S&P 500 ETF (IVV)
• Vanguard S&P 500 ETF (VOO)

Expense Ratio

The expense ratio for AVID is 0.35%, which is considered competitive within the actively managed large-cap equity ETF category.

Investment Approach and Strategy

Strategy: AVID actively manages its portfolio to identify and invest in US large-cap stocks with the potential to outperform during inflationary periods.

Composition: The ETF primarily holds US large-cap stocks across various sectors, with a focus on companies exhibiting specific financial characteristics.

Key Points

• Actively managed ETF targeting inflation-resistant US large-cap stocks.
• Strong historical performance exceeding the S&P 500 Index.
• Experienced management team from Avantis Investors.
• Moderate expense ratio compared to similar actively managed ETFs.

Risks

Volatility: AVID's actively managed approach and focus on specific sectors may lead to higher volatility than passively managed large-cap ETFs.

Market Risk: The ETF's performance is closely tied to the performance of the underlying US large-cap stocks, exposing it to potential market downturns.

Who Should Consider Investing?

AVID is suitable for investors:

• Seeking long-term capital appreciation.
• Believing inflation will remain elevated for an extended period.
• Willing to accept higher volatility for the potential of outperformance.

Fundamental Rating Based on AI

Using an AI-based rating system, we assign AVID a 7 out of 10 for its fundamentals. This rating considers the ETF's strong historical performance, experienced management team, and niche market focus. However, the limited track record and higher volatility compared to passive options warrant some caution.

Resources and Disclaimers

This analysis utilizes data from the following sources:

• American Century Investments
• Avantis Investors
• Bloomberg Terminal
• ETF.com

Please note that this information is for educational purposes only and should not be considered investment advice. Investing involves risk, and you should carefully consider your investment objectives and risk tolerance before making any investment decisions.