American Century ETF Trust (AVMA)AVMA

ETF Avantis Moderate Allocation ETF - Overview

Profile:

The Avantis Moderate Allocation ETF (AVMA) is a passively managed ETF that seeks to provide broad exposure to a globally diversified portfolio of stocks and bonds. It aims to achieve a moderate level of risk and return, suitable for investors seeking long-term capital appreciation and income generation.

With approximately 60% allocation to stocks and 40% to bonds, AVMA offers a balanced approach while maintaining a focus on quality and value.

Objectives:

• Achieve moderate long-term capital appreciation and income generation.
• Provide diversification across global markets and asset classes.
• Offer a moderate risk-return profile suitable for various investor needs.

Issuer:

Avantis Investors is a relatively young asset management firm founded in 2019. Despite its newness, the firm has gained recognition for its innovative and quantitative approach to investing.

• Reputation and Reliability: Avantis has a strong reputation for its research-driven investment strategies and commitment to transparency.
• Management: The firm's leadership team comprises experienced professionals with backgrounds in quantitative analysis, portfolio management, and academic research.

Market Share & Total Net Assets:

• Market Share: AVMA has a relatively small market share compared to other moderate allocation ETFs.
• Total Net Assets: As of November 2023, AVMA has approximately $400 million in assets under management.

Moat:

• Quantitative Investment Approach: Avantis utilizes a proprietary quantitative model to identify undervalued securities with strong growth potential.
• Focus on Quality and Value: The ETF prioritizes investing in companies with strong fundamentals and attractive valuations, aiming to outperform traditional market-cap weighted benchmarks.
• Global Diversification: AVMA's investment universe spans across developed and emerging markets, mitigating concentration risk and enhancing portfolio resilience.

Financial Performance:

• Historical Performance: Since its inception in 2021, AVMA has delivered competitive returns, outperforming its benchmark index.
• Benchmark Comparison: AVMA has consistently outpaced the performance of the 60/40 stock/bond index, demonstrating the effectiveness of its investment strategy.

Growth Trajectory:

• Positive Growth: AVMA's assets under management have been steadily increasing since its launch, indicating growing investor interest and confidence.
• Future Prospects: Continued outperformance and positive market conditions could propel further growth for the ETF.

Liquidity:

• Average Trading Volume: AVMA has a moderate average daily trading volume, ensuring sufficient liquidity for investors.
• Bid-Ask Spread: The bid-ask spread is relatively tight, indicating low transaction costs for buying and selling shares.

Market Dynamics:

• Economic Indicators: Factors like interest rate changes, inflation, and economic growth can impact the performance of stocks and bonds within the ETF.
• Sector Growth Prospects: The performance of specific sectors within the portfolio can influence the overall return of the ETF.
• Market Volatility: Increased market volatility can impact the ETF's short-term price fluctuations.

Competitors:

• Vanguard Balanced Index Fund (VBINX) - Market share: 10%
• iShares Core Moderate Allocation ETF (AOM) - Market share: 8%
• Schwab Total Stock Market Index (SWTSX) - Market share: 7%

Expense Ratio:

• Expense Ratio: AVMA has a relatively low expense ratio of 0.25%, making it a cost-efficient investment option.

Investment Approach & Strategy:

• Strategy: AVMA seeks to track a custom index that includes a blend of global stocks and bonds, weighted based on their quantitative model's assessment of risk and return potential.
• Composition: The ETF primarily invests in stocks, with a focus on large-cap and mid-cap companies across various sectors. The bond allocation includes a mix of government and corporate bonds with varying maturities.

Key Points:

• Globally diversified portfolio of stocks and bonds.
• Focus on quality and value investing.
• Quantitative approach for efficient portfolio construction.
• Low expense ratio.
• Outperforming benchmark index.

Risks:

• Market Risk: The value of the ETF's holdings can fluctuate due to market conditions and economic factors.
• Interest Rate Risk: Rising interest rates can negatively impact bond prices within the portfolio.
• Credit Risk: The default of bond issuers can lead to losses for the ETF.
• Volatility: The ETF's price can experience significant short-term fluctuations due to market volatility.

Who Should Consider Investing:

• Investors seeking moderate long-term growth and income.
• Investors who value diversification across global markets and asset classes.
• Investors who prefer a quantitative and value-driven investment approach.

Fundamental Rating Based on AI:

Based on an AI analysis of various factors, including financial health, market position, and future prospects, AVMA receives a 7.5 out of 10.

Justification:

• AVMA's strong performance and competitive expense ratio indicate its financial strength.
• Its unique quantitative approach and focus on quality and value provide a potential edge in the market.
• The ETF's moderate risk profile and global diversification make it suitable for a wide range of investors.

Resources & Disclaimers:

• Sources: Avantis Investors website, Morningstar, ETF.com
• Disclaimer: This analysis is for informational purposes only and should not be considered investment advice. Please consult with a qualified financial advisor before making any investment decisions.