Avantis® U.S. Small Cap Value ETF (AVUV)

ETF Avantis® U.S. Small Cap Value ETF (AVUV): Summary

Profile:

Avantis® U.S. Small Cap Value ETF (AVUV) is an actively managed exchange-traded fund that invests primarily in small-cap U.S. equities with value characteristics. The focus is on stocks with a combination of low valuations, strong profitability, and robust financial health. AVUV employs a quantitative approach to identify undervalued companies with high potential for long-term growth.

Objective:

The primary investment goal of AVUV is to achieve long-term capital appreciation by investing in a portfolio of small-cap U.S. value stocks.

Issuer:

AVUV is issued by Avantis Investors, an investment management firm founded in 2019 with a focus on quantitative, factor-based investing.

Reputation & Reliability:

Though relatively new, Avantis has established a strong track record in managing factor-based ETFs, with several funds outperforming their benchmarks. The firm boasts a team of experienced investment professionals with expertise in quantitative analysis and portfolio management.

Market Share:

AVUV currently commands a market share of approximately 0.58% within the U.S. Small Cap Value ETF category.

Total Net Assets:

As of October 26th, 2023, AVUV's total net assets amount to roughly $5.2 billion.

Moat:

AVUV's competitive advantages lie in its:

• Distinctive investment approach: The fund's quantitative model and focus on factors beyond traditional value metrics like price-to-book ratio set it apart from competitors.
• Experienced management team: The team's expertise in quantitative investing and track record of success provide investors with confidence.
• Lower fees: Compared to some actively managed small-cap value funds, AVUV boasts a relatively low expense ratio.

Financial Performance:

AVUV has delivered strong historical returns, outperforming its benchmark, the Russell 2000 Value Index, since its inception in 2019. The fund has also demonstrated lower volatility than the benchmark.

Benchmark Comparison:

The following table compares AVUV's performance to the Russell 2000 Value Index over different periods:

Growth Trajectory:

The small-cap value segment is expected to experience continued growth in the long term, driven by factors such as economic expansion and increasing investor demand for value stocks. AVUV is well-positioned to benefit from this growth trend.

Liquidity:

• Average Trading Volume: Approximately 400,000 shares per day, indicating good liquidity.
• Bid-Ask Spread: The average bid-ask spread is around 0.04%, signifying low trading costs.

Market Dynamics:

Several factors can affect AVUV's market performance, including:

• Economic growth: A strong economy tends to favor small-cap value stocks.
• Interest rates: Rising interest rates can negatively impact small-cap value stocks.
• Investor sentiment: Optimism towards small-cap value investing drives fund inflows and price increases.

Competitors:

Key competitors in the U.S. Small Cap Value ETF space include:

• iShares S&P SmallCap 600 Value ETF (IJS): Market share of 14.2%
• Vanguard Small-Cap Value ETF (VBR): Market share of 13.4%
• Schwab Small-Cap Value Index ETF (SVAL): Market share of 4.2%

Expense Ratio:

AVUV's expense ratio is 0.25%, making it a relatively inexpensive actively managed ETF in its category.

Investment Approach & Strategy:

• Strategy: AVUV employs an active management strategy, aiming to outperform the Russell 2000 Value Index.
• Composition: The fund primarily holds small-cap U.S. stocks with value characteristics. These include companies with low price-to-book ratios, high profitability, and strong financial health.

Key Points:

• Actively managed small-cap value ETF with a differentiated investment approach.
• Strong track record of outperformance compared to its benchmark.
• Experienced management team and lower expense ratio compared to some competitors.
• Good liquidity and low trading cost.

Risks:

• Volatility: Small-cap stocks are inherently more volatile than large-cap stocks.
• Market risk: AVUV's performance is tied to the overall performance of the U.S. small-cap value sector, which can be affected by economic and market conditions.
• Management risk: The fund's success depends heavily on the investment decisions made by the portfolio managers.

Who Should Consider Investing?

AVUV is suitable for investors seeking long-term capital appreciation through exposure to small-cap value stocks. It aligns well with investors:

• comfortable with higher volatility.
• believing in a long-term value investing approach.
• seeking an actively managed fund with a distinctive strategy.

Fundamental Rating Based on AI

7.5/10

Avantis® U.S. Small Cap Value ETF exhibits strong fundamentals based on an AI analysis. Factors such as the fund's performance, expense ratio, management team, and investment approach contribute to its positive rating. However, the relatively short track record and inherent volatility associated with small-cap stocks warrant some caution.

Resources & Disclaimers:

This summary utilizes data from Avantis Investors website, ETF.com, and Morningstar. Investors should conduct thorough research and consult a financial advisor before making any investment decisions. This analysis does not constitute financial advice and should not be solely relied on for investment purposes.