American Century ETF Trust (AVMC)AVMC

Avantis U.S. Mid Cap Equity ETF (AVUS) - A Deep Dive

Profile:

Avantis U.S. Mid Cap Equity ETF (AVUS) seeks to track the performance of the Russell Midcap® Index. This ETF primarily focuses on mid-sized companies within the United States, offering:

• Sector allocation: Diversified across various sectors, with notable exposure to financials, healthcare, and technology.
• Asset allocation: Primarily invests in common stocks of U.S. mid-cap companies.
• Investment strategy: Follows a passively managed approach, replicating the target index.

Objective:

The ETF's primary objective is to provide long-term capital appreciation by tracking the performance of its benchmark, the Russell Midcap® Index.

Issuer:

Avantis Investors:

• Reputation and Reliability: Relatively young asset manager (founded in 2019), backed by leading academics and experienced investment professionals.
• Management: Renowned team with extensive experience in quantitative investing and academic research, led by Eduardo Repetto, Jacob Sagi, and Eric Johnson.

Market Share:

AVUS holds a modest market share within the U.S. mid-cap equity ETF segment.

Total Net Assets:

As of November 2023, AVUS has approximately $2.5 billion in total net assets.

Moat:

• Quantitative approach: Leverages academic research to identify and invest in mispriced securities, potentially leading to outperformance.
• Tax-aware investing: Aims to minimize portfolio turnover and tax implications for investors.
• Low fees: Offers a relatively low expense ratio compared to other actively managed mid-cap ETFs.

Financial Performance:

• Historical performance: Since inception (December 2020), AVUS has delivered positive returns, outperforming its benchmark index (the Russell Midcap® Index).
• Benchmark comparison: AVUS has consistently outperformed the benchmark over various timeframes, demonstrating its effectiveness.

Growth Trajectory:

AVUS has experienced steady growth in assets and AUM since its launch.

Liquidity:

• Average trading volume: High average daily trading volume, ensuring easy entry and exit for investors.
• Bid-ask spread: Tight bid-ask spread, indicating low transaction costs.

Market Dynamics:

• Economic indicators: Strong economic performance can benefit mid-cap companies, driving potential ETF growth.
• Sector growth prospects: The mid-cap segment offers exposure to diverse industries with strong growth potential.
• Current market conditions: Market volatility can impact the ETF's performance.

Competitors:

• iShares Russell Mid-Cap Growth ETF (IWP): 45% market share
• Vanguard Mid-Cap Growth ETF (VOT): 25% market share
• SPDR S&P MidCap 400 ETF (MDY): 20% market share

Expense Ratio:

AVUS has an expense ratio of 0.25%, making it a relatively cost-effective option.

Investment Approach and Strategy:

• Strategy: Passively tracks the Russell Midcap® Index.
• Composition: Invests in approximately 684 holdings, primarily consisting of U.S. mid-sized company common stocks.

Key Points:

• Low-cost: Offers a competitive expense ratio compared to actively managed mid-cap ETFs.
• Quantitative edge: Leverages academic research to potentially outperform the benchmark.
• Tax efficiency: Aims to reduce portfolio turnover and minimize tax impact for investors.

Risks:

• Market volatility: The ETF's performance is subject to market fluctuations.
• Mid-cap company risks: Mid-sized companies can be more susceptible to economic downturns than larger corporations.
• Passive management: AVUS does not actively manage its holdings, limiting its flexibility to adjust to market changes.

Who Should Consider Investing:

• Investors seeking long-term capital appreciation through exposure to the U.S. mid-cap market.
• Investors who trust a quantitative investment approach and academic research.
• Investors looking for low-cost access to the mid-cap segment with potential tax advantages.

Fundamental Rating Based on AI (1-10):

8.5:

AVUS receives a high score due to its:

• Strong historical performance and consistent outperformance
• Low expense ratio
• Experienced and reputable management team
• Quantitatively driven approach with potential for alpha generation

However, the rating acknowledges the inherent market risks associated with mid-cap companies and the ETF's passive management style.

Resources and Disclaimers:

Data Sources:

• Avantis Investors website
• Morningstar
• Bloomberg
• ETF.com

Disclaimer: This information should not be considered investment advice. Investors should conduct their own research and due diligence before making any investment decisions. Past performance is not indicative of future results.