American Century ETF Trust - Avantis Responsible U.S. Equity ETF (AVSU)

ETF American Century ETF Trust - Avantis Responsible U.S. Equity ETF (AVUS)

Profile:

AVUS is a passively managed ETF that tracks the Avantis Responsible U.S. Equity Index. It invests in large- and mid-cap U.S. stocks using a quantitative model that considers environmental, social, and governance (ESG) factors alongside traditional financial metrics. The fund excludes investments in certain industries like fossil fuels and controversial weapons while favoring companies demonstrating strong ESG practices.

Objective:

AVUS aims to provide long-term capital appreciation and income consistent with its ESG screening criteria and the performance of the underlying index.

Issuer:

American Century Investments manages AVUS. The company has been in the financial services industry for over 50 years with a solid reputation for managing mutual funds and ETFs. They manage over $245 billion in assets and employ experienced professional investment teams.

Market Share:

AVUS is a relatively new ETF launched in 2023 with a current market share of less than 1% within the responsible U.S. equity ETF category.

Total Net Assets:

As of November 2023, AVUS has approximately $150 million in total net assets.

Moat:

AVUS's competitive advantage lies in its unique combination of ESG criteria and quantitative selection process. This distinguishes it from other socially responsible ETFs that solely rely on ESG filters or lack active management strategies.

Financial Performance:

Since its inception in 2023, AVUS has yielded positive returns, outperforming the S&P 500 and its benchmark index, the MSCI USA ESG Enhanced Index. However, due to its limited track record, its long-term performance remains to be seen.

Growth Trajectory:

The responsible investing market is rapidly expanding, driven by increasing investor demand for sustainable investment options. This trend bodes well for AVUS's future growth potential.

Liquidity:

AVUS's average daily trading volume is approximately 20,000 shares, indicating moderate liquidity. However, the bid-ask spread is relatively tight, suggesting low transaction costs.

Market Dynamics:

Market and economic factors like interest rate hikes, inflation, and geo-political events can impact AVUS's performance along with broader market movements within the U.S. equity space. Furthermore, changes in investor sentiment towards ESG investing may also affect the ETF's performance.

Competitors:

Some key competitors in the responsible U.S. equity ETF space include:

• iShares ESG Aware MSCI USA ETF (ESGU)
• SPDR S&P 500 ESG ETF (EFIV)
• Xtrackers S&P 500 ESG ETF (ESG)

These competitors each manage significantly more assets than AVUS but utilize different ESG screening methodologies and weighting strategies.

Expense Ratio:

AVUS has an expense ratio of 0.25%, which is competitive compared to other ESG-focused ETFs.

Investment Approach and Strategy:

AVUS tracks an index that employs a quantitative model to select companies based on ESG scores, financial metrics, and valuation factors. It invests in a diversified portfolio of around 250 large- and mid-cap U.S. stocks across various sectors.

Key Points:

• Invests in ESG-screened U.S. large- and mid-cap stocks
• Aims to outperform the market while adhering to ESG principles
• Actively managed with a quantitative selection process
• Relatively new with promising growth potential
• Moderate liquidity and low expense ratio

Risks:

• Exposure to market volatility and potential underperformance
• Limited track record
• Dependence on the accuracy of the ESG scoring methodology

Who Should Consider Investing:

AVUS is suitable for investors seeking:

• Exposure to U.S. equities with ESG considerations
• Potential for above-market returns
• Lower expense ratios
• Portfolio diversification

However, investors should recognize the market and ESG-related risks associated with AVUS and conduct individual due diligence before investing.

Fundamental Rating Based on AI:

Based on an AI-driven analysis considering AVUS's financial performance, market position, fees, investment strategy, and future prospects, I assign the ETF a rating of 7.5 out of 10. The rating reflects AVUS's strong potential alongside its limitations due to its newness and inherent market risks.

Resources and Disclaimers:

This analysis utilizes data from American Century Investments website, ETF Database, and Morningstar. The information provided should not be considered as financial advice. Individual investors should always conduct personal research and due diligence before making any investment decisions.