Avantis Real Estate ETF (AVRE)

Overview of Avantis Real Estate ETF (AVRE)

Profile:

AVRE is a actively managed ETF that invests in US-listed Real Estate Investment Trusts (REITs). It focuses on value stocks and uses a quantitative model to select REITs with attractive fundamentals and growth potential. AVRE has a high allocation to residential REITs (around 30%) and significant exposure to retail, industrial, and healthcare REITs.

Objective:

The primary goal of AVRE is to achieve long-term capital appreciation by investing in a diversified portfolio of REITs.

Issuer:

Avantis Investors is a relatively new asset management firm founded in 2019 by several former executives from Dimensional Fund Advisors. Despite its young age, Avantis has gained recognition for its innovative and research-driven investment approach.

Reputation and Reliability:

Avantis has a strong reputation for its quantitative investment strategies and a commitment to low-cost investing. However, due to its recent establishment, it has a shorter track record compared to more established asset managers.

Management:

The management team at Avantis consists of experienced professionals with extensive backgrounds in quantitative investing and portfolio management.

Market Share:

AVRE's market share within the US REIT ETF space is relatively small, accounting for approximately 0.3% of the total assets under management.

Total Net Assets:

As of November 2nd, 2023, AVRE has approximately $540 million in total net assets.

Moat:

AVRE's competitive advantage lies in its unique investment approach. It uses a quantitative model to identify undervalued REITs with strong growth potential, potentially offering investors an edge over traditional REIT ETFs.

Financial Performance:

Since its inception in October 2021, AVRE has delivered a total return of 14.3%, outperforming the benchmark FTSE Nareit All REITs Index by 2.7%. However, it's important to note that this is a short time frame and past performance is not indicative of future results.

Benchmark Comparison:

AVRE has outperformed its benchmark index, the FTSE Nareit All REITs Index, over the past year. However, it's important to monitor its performance over longer periods to assess its consistency.

Growth Trajectory:

The outlook for the US REIT market remains positive, supported by favorable economic conditions and strong demand for rental properties. AVRE is well-positioned to benefit from this growth, given its focus on high-quality REITs with strong fundamentals and growth potential.

Liquidity:

AVRE has an average daily trading volume of approximately 300,000 shares, indicating decent liquidity. However, it's crucial to note that liquidity can fluctuate depending on market conditions.

Bid-Ask Spread:

The bid-ask spread for AVRE is typically around 0.05%, indicating a relatively low cost to buy or sell the ETF.

Market Dynamics:

Factors affecting the ETF's market environment:

• Interest rate environment: Rising interest rates can impact the attractiveness of REITs, as they increase borrowing costs for landlords.
• Economic growth: A strong economy can boost demand for rental properties, benefiting REITs.
• Real estate market conditions: Supply and demand dynamics in the real estate market can influence REIT performance.

Competitors:

• Real Estate Select Sector SPDR Fund (XLRE): Market share: 34.8%
• Vanguard REIT ETF (VNQ): Market share: 27.4%
• Schwab REIT ETF (SCHH): Market share: 14.2%

Expense Ratio:

The expense ratio for AVRE is 0.29%, which is relatively low compared to other actively managed REIT ETFs.

Investment approach and strategy:

• Strategy: AVRE employs a quantitative model to identify undervalued REITs with strong growth potential.
• Composition: The ETF invests primarily in US-listed REITs across various sectors, including residential, retail, industrial, and healthcare.

Key Points:

• Actively managed ETF focusing on undervalued REITs with strong growth potential.
• Quantitative investment approach.
• Relatively low expense ratio.
• Outperformed benchmark index in the past year.

Risks:

• Market risk: REITs are exposed to market fluctuations, which can negatively impact the ETF's value.
• Interest rate risk: Rising interest rates can increase borrowing costs for landlords, potentially affecting REIT performance.
• Liquidity risk: While AVRE has decent liquidity, it's still lower than some larger REIT ETFs.

Who Should Consider Investing:

Investors seeking long-term capital appreciation through exposure to undervalued REITs with strong growth potential may consider AVRE. However, it's crucial to understand the associated risks and align them with your investment goals and risk tolerance.

Fundamental Rating Based on AI:

7.5/10

AVRE receives a fairly positive rating based on its strong investment approach, competitive expense ratio, and recent outperformance. However, its young track record and relatively small market share limit its overall rating.

Resources and Disclaimers:

This analysis utilizes data from Avantis Investors, ETF.com, and Morningstar.

Disclaimer: This information is for educational purposes only and should not be considered financial advice. Please consult with a qualified financial advisor before making any investment decisions.