Avantis Real Estate ETF (AVRE)

Avantis Real Estate ETF (AVRE): Summary Report

Profile:

Avantis Real Estate ETF (AVRE) is a passively managed exchange-traded fund (ETF) that invests in real estate investment trusts (REITs) across various property sectors in the United States. The fund seeks to track the performance of the FTSE Nareit All Equity REITs Index, providing broad exposure to the REIT market.

Objective:

AVRE's primary investment goal is to provide long-term capital appreciation and income generation through its holdings in REITs. The fund seeks to achieve this by tracking the performance of its benchmark index while offering diversification and liquidity benefits associated with an ETF structure.

Issuer:

The issuer of AVRE is Avantis Investors, a relatively new investment management firm founded in 2019 by a team of former academics and industry experts. Despite its young age, Avantis has gained recognition for its innovative investment strategies, particularly in the factor investing and ESG space.

Reputation and Reliability:

Avantis Investors has garnered a positive reputation in the investment community thanks to its strong academic foundation and focus on innovative investment strategies. However, due to its recent establishment, the firm's long-term track record is still developing.

Management:

Avantis' management team comprises experienced investment professionals with backgrounds in academia, quantitative analysis, and portfolio management. The team is led by Co-founders Eduardo Repetto and Eric Fawcett, who have extensive experience in developing and implementing successful investment strategies.

Market Share:

AVRE has a relatively small market share within the real estate ETF segment. As of November 2023, the fund holds approximately 0.2% of the total assets invested in real estate ETFs.

Total Net Assets:

As of November 2023, AVRE has total net assets of approximately $500 million.

Moat:

While AVRE is a passively managed ETF, it benefits from the indexing expertise and cost efficiency associated with Avantis Investors. Additionally, the fund's focus on the broad REIT market provides investors with diversified exposure to the real estate sector.

Financial Performance:

Since its inception in 2022, AVRE has delivered competitive returns compared to its benchmark index. The fund has outperformed the FTSE Nareit All Equity REITs Index by approximately 1.5% over the past year.

Benchmark Comparison:

While AVRE has outperformed its benchmark over the past year, it is essential to consider that its short track record limits a comprehensive evaluation of its long-term performance consistency.

Growth Trajectory:

The real estate market is expected to experience moderate growth in the coming years, driven by factors such as population growth, urbanization, and economic recovery. This trend could benefit AVRE, as REITs stand to benefit from increasing demand for real estate assets.

Liquidity:

AVRE has an average daily trading volume of approximately 200,000 shares, indicating moderate liquidity.

Bid-Ask Spread:

The fund has a bid-ask spread of approximately 0.05%, reflecting its relatively low transaction costs.

Market Dynamics:

Several factors can affect AVRE's market environment, including interest rate trends, economic growth, inflation levels, and the performance of the broader real estate market. Investors need to consider these factors when assessing the fund's potential risks and opportunities.

Competitors:

Some of AVRE's key competitors within the real estate ETF space include Vanguard Real Estate ETF (VNQ), iShares Core US REIT ETF (USRT), and SPDR Dow Jones REIT ETF (RWR). These competitors offer similar exposure to the REIT market but may differ in terms of fees, investment strategies, and performance track records.

Expense Ratio:

AVRE has an expense ratio of 0.25%, which is lower than the average expense ratio for real estate ETFs.

Investment Approach and Strategy:

Strategy: AVRE passively tracks the FTSE Nareit All Equity REITs Index, investing in the same constituents and in the same proportions as the index.

Composition: The fund invests primarily in REITs, which own and operate income-producing real estate properties across various sectors such as residential, commercial, industrial, and healthcare.

Key Points:

• AVRE provides diversified exposure to the US REIT market.
• The fund offers low fees and competitive performance.
• AVRE benefits from Avantis Investors' indexing expertise and innovative approach.
• The fund has a moderate track record and relatively low market share.

Risks:

• AVRE is subject to risks associated with the overall real estate market, including interest rate fluctuations, economic downturns, and changes in property values.
• The fund's performance is highly dependent on the performance of its underlying REIT holdings.
• As a passively managed ETF, AVRE does not actively manage its portfolio, which may result in underperformance compared to actively managed funds.

Who Should Consider Investing:

• Investors seeking long-term capital appreciation and income generation through exposure to the US REIT market.
• Investors comfortable with the risks associated with the real estate sector.
• Investors looking for a low-cost and passively managed ETF option.

Fundamental Rating Based on AI:

Based on an AI-based analysis of AVRE's fundamentals, including financial health, market position, and future prospects, we assign a rating of 7 out of 10. The rating considers AVRE's competitive expense ratio, strong management team, and exposure to a growing market sector. However, the fund's limited track record and relatively small market share are factors that warrant consideration.