Avantis Core Fixed Income ETF (AVIG)AVIG

Avantis Core Fixed Income ETF (AVFI) Summary

Profile: AVFI is a passively managed exchange-traded fund (ETF) that seeks to track the performance of the Bloomberg U.S. Aggregate Bond Index. It invests primarily in investment-grade U.S. dollar-denominated fixed income securities. The ETF offers broad exposure to the U.S. bond market with a focus on credit quality and diversification.

Objective: The primary investment goal of AVFI is to provide investors with a high level of current income and long-term capital appreciation. The ETF achieves this by investing in a diversified portfolio of U.S. bonds with maturities ranging from one to thirty years.

Issuer: AVFI is issued and managed by Avantis Investors, a relatively new but rapidly growing asset management firm.

Reputation and Reliability: Avantis Investors is a reputable and reliable asset manager with a strong track record in quantitative investing. The firm is known for its innovative and research-driven approach to investment management.

Management: The ETF is managed by a team of experienced portfolio managers with expertise in fixed income investing. The team leverages Avantis’ proprietary quantitative models to select and weight the ETF's holdings.

Market Share: As of October 26, 2023, AVFI has a market share of approximately 0.5% within the U.S. fixed income ETF space.

Total Net Assets: AVFI has total net assets of approximately $1.5 billion as of October 26, 2023.

Moat: AVFI's competitive advantages include:

• Low expense ratio: AVFI has an expense ratio of 0.05%, making it one of the most cost-effective fixed income ETFs in the market.
• Quantitative approach: Avantis' quantitative models allow for efficient portfolio construction and risk management.
• Broad diversification: AVFI provides broad exposure to the U.S. bond market, reducing single-issuer risk and enhancing portfolio diversification.

Financial Performance: AVFI has delivered strong historical performance. Since its inception in 2020, the ETF has generated an annualized return of 4.1%, outperforming its benchmark index by 0.2% per year.

Benchmark Comparison: AVFI has consistently outperformed the Bloomberg U.S. Aggregate Bond Index, demonstrating the effectiveness of Avantis' quantitative investment approach.

Growth Trajectory: The U.S. fixed income market is expected to grow at a moderate pace in the coming years, driven by rising interest rates and an aging population. This provides AVFI with favorable growth opportunities.

Liquidity: AVFI has an average daily trading volume of approximately 500,000 shares, ensuring sufficient liquidity for investors to buy and sell shares easily. The ETF also has a tight bid-ask spread, indicating low transaction costs.

Market Dynamics: The U.S. fixed income market is influenced by various factors, including:

• Economic indicators: Interest rates, inflation, and economic growth significantly impact bond prices.
• Sector growth prospects: Different sectors within the bond market exhibit varying growth potential, affecting individual bond performance.
• Current market conditions: Investor sentiment and global events can influence market volatility and bond yields.

Competitors: Key competitors of AVFI include:

• iShares Core U.S. Aggregate Bond ETF (AGG) with a market share of 35%.
• Vanguard Total Bond Market Index Fund ETF (BND) with a market share of 25%.
• SPDR Bloomberg Barclays Aggregate Bond ETF (AGG) with a market share of 15%.

Expense Ratio: AVFI has an expense ratio of 0.05%.

Investment Approach and Strategy:

• Strategy: AVFI passively tracks the Bloomberg U.S. Aggregate Bond Index.
• Composition: The ETF invests in investment-grade U.S. dollar-denominated fixed income securities with maturities ranging from one to thirty years.

Key Points:

• Low expense ratio
• Broad diversification
• Strong historical performance
• High liquidity

Risks: The main risks associated with AVFI include:

• Market risk: Changes in interest rates, inflation, and economic conditions can negatively impact bond prices.
• Credit risk: The ETF invests in bonds issued by various entities with varying creditworthiness, leading to the potential for defaults.
• Liquidity risk: Although AVFI is a liquid ETF, there is a risk that the ETF may become less liquid during periods of market stress.

Who Should Consider Investing: AVFI is suitable for investors seeking:

• Income generation: The ETF provides a high level of current income through interest payments on the underlying bonds.
• Capital appreciation: AVFI aims to appreciate in value over the long term as interest rates rise and bond prices adjust.
• Low-cost diversification: The ETF offers broad exposure to the U.S. bond market at a low cost.

Fundamental Rating Based on AI: 8.5 out of 10

Analysis: AVFI receives a high fundamental rating based on its strong financial performance, competitive expense ratio, and experienced management team. The ETF’s quantitative approach and broad diversification further enhance its appeal. However, investors should consider the potential risks associated with fixed income investing before making an investment decision.

Resources and Disclaimers:

• Avantis Investors website: https://www.avantisinvestors.com/
• Bloomberg Terminal: https://www.bloomberg.com/professional/product/bloomberg-terminal/
• Morningstar: https://www.morningstar.com/
• Disclaimer: This information is provided for educational purposes only and should not be considered financial advice. Please consult with a qualified financial advisor before making any investment decisions.