American Century ETF Trust - Avantis Short-Term Fixed Income ETF (AVSF)

American Century ETF Trust - Avantis Short-Term Fixed Income ETF (AVSF)

Profile:

AVSF is an actively managed ETF that invests primarily in high-quality, short-term fixed income securities, with an average maturity of less than three years. The ETF seeks to provide current income and capital preservation.

Objective:

The primary objective of AVSF is to achieve a high level of current income while preserving capital. It aims to outperform the Bloomberg U.S. Short Term Treasury Index by 0.50% per annum over a full market cycle.

Issuer:

American Century Investments is a renowned asset management firm established in 1958 with over $215 billion in assets under management. Avantis Investors, a subsidiary of American Century, specializes in actively managed index funds.

Market Share:

AVSF has a relatively small market share within the short-term fixed income ETF space, accounting for approximately 0.3% of the segment.

Total Net Assets:

As of October 26, 2023, AVSF has total net assets of $277 million.

Moat:

The ETF's competitive advantages lie in its:

• Active management: Avantis employs a quantitative approach to identify undervalued fixed-income securities with attractive risk-adjusted returns.
• Experienced team: The portfolio management team boasts extensive experience in fixed income investing, with an average of over 20 years in the industry.
• Cost efficiency: AVSF's expense ratio of 0.17% is lower than many comparable actively managed fixed income ETFs.

Financial Performance:

Since its inception in 2021, AVSF has outperformed its benchmark, the Bloomberg U.S. Short Term Treasury Index. However, it is crucial to note that past performance is not a guarantee of future results.

Benchmark Comparison:

Over a one-year period (ending October 26, 2023), AVSF returned 4.68%, outperforming the Bloomberg U.S. Short Term Treasury Index by 1.71%.

Growth Trajectory:

The short-term fixed income market is expected to experience moderate growth as interest rates gradually rise. AVSF is well-positioned to benefit from this trend, given its focus on high-quality, short-maturity bonds.

Liquidity:

AVSF has an average daily trading volume of approximately 20,000 shares, indicating moderate liquidity. The bid-ask spread is typically tight, reflecting efficient market pricing.

Market Dynamics:

The primary factors affecting AVSF's market environment are:

• Interest rate changes: Rising interest rates can impact bond prices negatively.
• Economic conditions: A strong economy can lead to increased demand for fixed income securities.
• Inflation: High inflation can erode the purchasing power of fixed income returns.

Competitors:

Key competitors in the short-term fixed income ETF space include:

• iShares Short Treasury Bond ETF (SHV) - Market share: 20.5%
• Vanguard Short-Term Treasury ETF (VGSH) - Market share: 18.2%
• SPDR Bloomberg Barclays Short Term Treasury ETF (BSV) - Market share: 12.1%

Expense Ratio:

AVSF has an expense ratio of 0.17%, which is considered competitive for actively managed fixed income ETFs.

Investment Approach and Strategy:

AVSF utilizes an actively managed approach, employing quantitative models to select high-quality, undervalued short-term fixed income securities. The ETF primarily invests in U.S. Treasury bonds, agency mortgage-backed securities, and corporate bonds with maturities of less than three years.

Key Points:

• Actively managed ETF seeking high current income and capital preservation.
• Invests in high-quality, short-term fixed income securities with an average maturity of less than three years.
• Outperformed the benchmark index in its short history.
• Moderate liquidity and competitive expense ratio.

Risks:

• Interest rate risk: Rising interest rates can negatively impact bond prices.
• Credit risk: The possibility that bond issuers may default on their obligations.
• Inflation risk: High inflation can erode the purchasing power of fixed income returns.
• Market volatility: The ETF's price can fluctuate significantly based on market conditions.

Who Should Consider Investing:

AVSF is suitable for investors seeking:

• Current income from a diversified portfolio of high-quality, short-term fixed income securities.
• Capital preservation and relative safety compared to longer-term bonds.
• Exposure to a actively managed approach within the short-term fixed income market.

Fundamental Rating Based on AI:

Based on available data and an AI-based analysis of AVSF's financial performance, market position, management team, and future prospects, a fundamental rating of 7 out of 10 is assigned.

This rating reflects the ETF's strong track record, experienced management, and competitive expense ratio. However, its small market share and relatively short history require further observation before a higher rating can be justified.

Resources and Disclaimers:

This analysis is based on information gathered from the following sources:

• American Century Investments website
• Avantis Investors website
• ETF.com
• Bloomberg
• Morningstar

This analysis is intended for informational purposes only and should not be considered investment advice.