Avantis Core Municipal Fixed Income ETF (AVMU)

Avantis Core Municipal Fixed Income ETF (AVMU) Overview

Profile:

AVMU is an actively managed ETF that invests primarily in investment-grade, long-term municipal bonds issued by state and local governments. It aims to provide a high level of current income exempt from federal and most state and local taxes. The ETF has a duration of around 10 years and focuses on minimizing interest-rate risk.

Objective:

The primary investment goal of AVMU is to maximize total return consisting of tax-exempt income and capital appreciation.

Issuer:

AVMU is issued by Avantis Investors, a leading asset management firm with a strong reputation for innovation and low-cost investment solutions. The firm has a proven track record of success in managing actively managed ETFs.

Market Share:

AVMU has a market share of approximately 0.5% within the municipal bond ETF space.

Total Net Assets:

As of November 7, 2023, AVMU has approximately $1.5 billion in total net assets.

Moat:

AVMU's competitive advantages include:

• Active Management: The ETF leverages Avantis's proprietary quantitative research and active management approach to generate alpha and outperform the benchmark.
• Tax-Exempt Income: AVMU's focus on municipal bonds provides investors with tax-exempt income, making it attractive for individuals and institutions seeking tax-advantaged returns.
• Lower Interest-Rate Risk: The ETF's moderate duration helps mitigate interest-rate risk, making it suitable for investors concerned about rising rates.

Financial Performance:

AVMU has delivered strong historical performance, outperforming its benchmark index, the Bloomberg Barclays Municipal Bond Index, since its inception in 2021.

Growth Trajectory:

The municipal bond market is expected to experience moderate growth in the coming years, driven by factors such as infrastructure spending and low-interest rates. This bodes well for AVMU's future growth prospects.

Liquidity:

AVMU has an average daily trading volume of approximately 100,000 shares, indicating good liquidity. The bid-ask spread is tight, suggesting low trading costs.

Market Dynamics:

Factors affecting AVMU's market environment include:

• Interest Rate Movements: Rising interest rates can negatively impact the value of fixed-income investments like AVMU.
• Economic Growth: A strong economy can lead to increased demand for municipal bonds, potentially boosting AVMU's performance.
• Tax Policy Changes: Changes in tax laws could impact the attractiveness of municipal bonds, affecting AVMU's demand.

Competitors:

Key competitors of AVMU include:

• iShares National Muni Bond ETF (MUB)
• Vanguard Tax-Exempt Bond ETF (VTEB)
• SPDR Nuveen Barclays Municipal Bond ETF (TFI)

Expense Ratio:

AVMU has an expense ratio of 0.10%, making it one of the lowest-cost actively managed municipal bond ETFs available.

Investment Approach and Strategy:

AVMU utilizes an active management approach to select individual municipal bonds with the potential to outperform the benchmark index. The ETF holds a diversified portfolio of bonds across various maturities and issuers.

Key Points:

• Actively managed ETF with a focus on tax-exempt income.
• Strong historical performance and competitive expense ratio.
• Moderate duration mitigates interest-rate risk.
• Suitable for investors seeking tax-advantaged income and capital appreciation.

Risks:

• Interest rate risk: Rising interest rates can lead to a decline in the value of the ETF.
• Credit risk: The ETF invests in municipal bonds, which carry varying levels of credit risk.
• Liquidity risk: Although the ETF has decent liquidity, it may be impacted by market conditions.

Who Should Consider Investing:

AVMU is suitable for investors seeking:

• Tax-exempt income from municipal bonds.
• Moderate interest-rate risk exposure.
• Active management expertise.
• Low-cost investment solution.

Fundamental Rating Based on AI:

Based on an AI-powered analysis, AVMU receives a 7.5 out of 10 rating. This rating considers factors such as the ETF's financial performance, market position, competitive advantages, and future prospects. The strong performance, low expense ratio, and experienced management team contribute to the positive rating. However, the relatively small market share and limited track record compared to some competitors are factors to consider.

Resources and Disclaimers:

This analysis utilizes data from Avantis Investors, Bloomberg, and 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.