Avantis International Small Cap Value AVDV looks beyond the stature of small-cap stocks to gain an edge. It holds shares in a diverse collection of smaller companies trading at low multiples relative to their profits. The management team's consistency in delivering this fund's intended risk exposures warrants a People Pillar upgrade to Above Average from Average. It earns a Morningstar Medalist Rating of Bronze.

The portfolio managers at Avantis select this portfolio’s holdings from the bottom 8% of foreign developed markets by market capitalization. They sort this cohort by price/book ratio (adjusted to remove goodwill) and a cash-based measure of profitability, two fundamental characteristics associated with high expected returns. The managers target the top fourth of stocks with the most attractive combination of relatively low multiples and high profitability, and they weight them in a way that further emphasizes the cheapest and most profitable names. Each stock receives a market-cap multiplier that scales its market-cap weight. Cheaper stocks with higher profitability receive larger multipliers than those with the opposite characteristics. Generous buffer zones help curtail unnecessary turnover and transaction costs. Traders have the freedom to choose which stocks they trade, which can help further curb the costs of trading.

The result is a diverse portfolio of small profitable stocks with lowly valuations. Its average price/book ratio typically lands near the MSCI ACWI ex USA SMID Value Index, but its profitability, as measured by return on invested capital, has consistently been higher.

An acute emphasis on smaller and cheaper stocks has paid off over the fund’s short existence. This exchange-traded fund outperformed the MSCI ACWI ex USA SMID Value Index by 2.4 percentage points per year from its launch in September 2019 through May 2023. Avantis levies a 0.36% expense ratio for this fund, a lower fee than many of its competitors that should provide a long-term edge.

Analyst Rating

A small-cap value strategy that favors profitable stocks.

Senior Analyst

Daniel Sotiroff

Enerplus

Blackrock Income Trust

Crescent Point Energy

Golar LNG

Warner Bros Discovery Inc

Prudential Financial

ePlus

Vermilion Energy

ProShares Ultra MSCI Japan

This small-cap portfolio targets profitable companies trading at low multiples, earning an Above Average Process Pillar rating.

Above Average

Process

The Avantis team has grown, and management responsibilities are spread across more individuals, earning a People Pillar upgrade to Above Average from Average. Key-person risk appears lower than it had been when the team was first formed, and it has consistently delivered on its funds’ targeted risk exposures.
Daniel Ong, Mitchell Firestein, Ted Randall, and Eduardo Repetto are the fund's named portfolio managers. All four joined Avantis in 2019 and had managed similar strategies at DFA. Repetto is the group's chief investment officer and previously served as DFA's co-CEO and co-CIO. The four jointly manage the firm's equity strategies, along with relative newcomer Matthew Dubin.
These managers have access to much of American Century's infrastructure, including a central trading desk, data collection, and compliance teams. The group built out a new portfolio management system that helps automate the managers' workflow and improve efficiency. It allows them to spend less time on routine tasks and focus on items around the edges that can improve performance, such as cost-efficient execution and voluntary corporate actions.
The management processes appear to be working as intended. The funds managed by this group have followed expected performance patterns. None of the equity ETFs overseen by this team had made capital gains distributions as of May 2023.

People

An evolution is taking hold at American Century, but some pluses and minuses continue, supporting a continued Parent rating of Average.
The firm entered the ETF market in 2019 by launching Avantis Investors, led by former executives from Dimensional, a strong firm that manages semi-passive strategies with value tilts and low fees. Avantis is now running roughly a dozen ETFs with similar features, while American Century’s in-house teams manage another 16 active ETFs. This effort is still fairly new and small as a percentage of assets under management, as most ETFs have been launched since 2019, but they help American Century compete with lower-cost passive and strategic-beta funds.
The bulk of the firm’s assets remain in U.S. mutual funds run by its internal boutiques. The U.S. value team has long been a standout, with tenured, stable management and good long-term results, but other investment teams haven’t produced consistently distinctive portfolios or performance, and some have continued to endure investment-professional turnover.
The firm’s ownership structure is noteworthy and supports a long-term strategy. While the firm has worked with a few large minority shareholders, including current 41% stakeholder Nomura, The Stowers Institute for Medical Research owns 45% of the firm but holds 70% of the equity voting rights. Employees own the rest, which should encourage retention.

Average

Parent

Avantis International Small Cap Value ETF

AVDV is an actively-managed portfolio of non-US small-cap value companies in developed markets.

Avantis International Small Cap Value ETF is a potential investment option for when the market rotation favors international small-value stocks. AVDV offers a diversified portfolio of non-U.S. developed small-cap companies with low valuations and higher profitability ratios. The fund's unique hybrid approach combines passive indexing with informed investment decisions based on current prices, setting it apart from other ETFs.

AVDV: A Strong Diversifier For International Small Value Investors

Capital Group Global Growth Equity ETF

Dimensional US Core Equity 2 ETF

Dimensional International Core Equity Market ETF

Dimensional International Core Equity 2 ETF

Dimensional International Small Cap ETF

Dimensional International Value ETF

Blackrock US Equity Factor Rotation ETF

Fidelity Enhanced International ETF

JPMorgan Nasdaq Equity Premium Income ETF

Active ETF strategies have stormed the scene over the past year and are growing at a dizzying pace. First-quarter net inflows into actively managed ETFs surged past the previous record to $66 billion.

Active ETFs: Bright Spots Beyond the Border

Avantis International Small Cap Value ETF is an actively managed fund in small caps with value and profitability characteristics. The AVDV ETF portfolio is overweight in Japan but well-diversified across sectors and holdings. It is superior to an international small cap benchmark regarding valuation and growth metrics.

AVDV: Value Meets Performance In International Small Caps

Apollo Senior Floating Rate Fund

Avantis US Large Cap Value ETF

Avantis U.S. Small Cap Value ETF

Invesco Senior Loan ETF

Global X MLP & Energy Infrastructure ETF

Vanguard Small Cap Value ETF

Vanguard Value ETF

Vanguard Total International Stock ETF

Vanguard International High Dividend Yield ETF

Energy Select Sector SPDR Fund

Undervalued industries, regions, and equity market segments offer investors the potential for strong, market-beating returns. There are ETFs tracking most of these. An overview of these follows.

Most Undervalued Asset Classes, Equity Industries, Segments, And Regions - 2024

Avantis Emerging Markets Equity ETF

Avantis Emerging Markets Value ETF

Avantis International Large Cap Value ETF

Avantis All International Markets Equity ETF

Avantis All International Markets Value ETF

With the expectation of Federal Reserve rate cuts to come this year, global central banks could also follow suit. This could pave the way for international equities to run higher, giving investors upside while also getting diversified exposure.

These 2 ETFs Provide Active, Diversified International Exposure

An initial lull ahead of a so-called “January Effect” is stifling the U.S. equities rally investors saw in 2023 and small caps haven't been immune. Nonetheless, active strategies can help mute the short-term downside by adding flexibility when markets fluctuate.

Take Advantage of the January Effect With Active Small Cap ETFs

The debate between large caps vs. small caps continues as U.S. equity benchmarks cross key levels and the Fed maintains its policy rate. Domestic equities have outperformed non-U.S. allocations over the years, but there are mixed opinions on whether this trend will continue. The Avantis International Small Cap Value ETF offers diversified exposure to ex-U.S. equities, but its low weighting in tech may impact long-term performance.

AVDV: Low Tech, Non-US Weighting A Factor, Market Positioning Says Otherwise

Avantis US Equity ETF

Vanguard Total Bond Market ETF

Capital Group Dividend Value ETF

Capital Group Growth ETF

Dimensional Core Fixed Income ETF

Dimensional Emerging Markets Core Equity 2 ETF

Dimensional Emerging Markets Value ETF

Dimensional US Equity ETF

Dimensional US High Profitability ETF

iShares MSCI Emerging Markets ETF

Fidelity Total Bond ETF

First Trust TCW Opportunistic Fixed Income ETF

Janus Henderson AAA CLO ETF

JPMorgan Equity Premium Income ETF

Janus Henderson Mortgage-Backed Securities ETF

Putnam ESG Core Bond ETF

PGIM Ultra Short Bond ETF

And, plenty of ink has been spilled about how much money has gone into active ETFs in 2023, and from a pure top-line flows perspective, it's true. A significant chunk of the $289 billion that has entered U.S.-listed ETFs year to date went into active products — 22%, in fact.

2023's Overactive Active ETF Flows Are Mostly a Mirage

Avantis International Small Cap Value ETF is an actively managed ETF focused on value and profitability. Japan represents 28% of asset value. The portfolio is well-diversiifed across sectors and holdings.

AVDV: A Well-Diversified Global ETF Beating Its Peers

International equities are running alongside the bull run in the major market indexes in the U.S. in the rally. It's an opportune time to position a portfolio for more upside gain in international small-caps.

As International Equities Surge, Get Small-Cap Exposure

International small-cap value stocks are the cheapest stocks right now. AVDV invests in these securities, has outperformed its benchmark since inception, and has outperformed the S&P 500 for a few years.

AVDV: International Small-Cap Value ETF, Incredibly Cheap Valuation, Good Performance

Xtrackers Low Beta High Yield Bond ETF

The ETF Issuer League Table includes ETF issuers of all sizes, from BlackRock's iShares suite and Vanguard's roster of low fee, each with hundreds of billions worth of ETF AUM, to smaller shops with just a few billion dollars across their ETF lineup.

ETF Issuer League: Big Spikes for American Century, DWS

In a recent article I suggested international stocks as an alternative while the cap-weighted S&P 500 completed a downward rerating of high-priced growth stocks. The Vanguard FTSE Europe ETF with little tech or overpriced growth might serve as a direct alternative to the S&P 500.

AVDV: An International Solution To An Overpriced U.S. Market?

iShares MSCI EAFE Small-Cap ETF

The Avantis International Small Cap Value ETF actively invests in Value stocks of small-cap companies, within the market capitalization range of the MSCI World ex USA Small Cap Index. The iShares MSCI EAFE Small-Cap ETF has longer history and invests based on the MSCI EAFE Small Cap Index. This ETF invests in both Value and Growth stocks.

AVDV Vs. SCZ: The New ETF Has Proven Its Worth So Far

Avantis International Equity ETF

Tired of all the Fed watch back and forth? Investors appear to be turning away from reading the FOMC tea leaves and instead looking abroad from U.S. equities to international offerings.

How an Active International ETF Trio Can Help Your Portfolio

Avantis International Small Cap Value ETF is an actively managed international small-cap exchange-traded fund. AVDV has 59% of its asset value in 3 sectors: industrials, materials and financials, almost in equal weight.

AVDV: Best Of Breed Global Small-Cap ETF

Manager Directed Portfolios - iM DBi Managed Futures Strategy ETF

iPath Global Carbon ETN

Quadratic Interest Rate Volatility and Inflation ETF

Innovator S&P 500 Power Buffer ETF - November

Global X Cannabis ETF

RPAR Risk Parity ETF

It may not feel like it, but it was just three years ago that the SEC adopted its new ETF rules, modernizing how the wrapper is regulated. The move had been a long time coming, taking the burgeoning ETF space to new heights.

Takeaways as Class of 2019 ETFs Hit 3-Year Mark

With small-cap stocks sagging, they're easily ignored by some investors. The same goes for international equities, which have long vexed U.S. investors.

AVDV Is Advantageous for International Value Exposure

This week, Avantis Investors, an investment offering from global asset manager American Century Investments, reached the three-year anniversary of bringing its first five equity ETFs to the market. And at the three-year mark, each of the five initial Avantis ETFs has surpassed $1 billion in assets under management.

3 Years After Their Launch, 5 Avantis Funds Have More Than $1 Billion in Assets

KANSAS CITY, Mo. , Sept. 29, 2022 /PRNewswire/ -- This week, Avantis Investors ®, an investment offering from global asset manager American Century Investments®, reached the three-year anniversary of bringing its first five equity ETFs to the market.

AVANTIS REACHES THREE-YEAR ANNIVERSARY, CONTINUES TO EXPAND OFFERING

The Commerce Department's recently released GDP numbers are fanning fears that the U.S. economy may already be in a recession. Gross domestic product fell at an inflation and seasonally adjusted annual rate of 0.9% in the second quarter.

Be Proactive With Your Equity Investments Amid a Potential Recession

Getting small-cap exposure with international exposure can add a component of growth tinged with diversification in their portfolios. Given the current unknowns in the market environment, it might be difficult for risk-averse investors to fathom, but there are options that exist.

This ETF Gives International Exposure for a Small-Cap Comeback

AVDV is a small-cap ex-US value fund, and it is also a dividend ETF. Japan is the heaviest country in the portfolio. China and Russia are not part of it.

AVDV: Value In Ex-U.S. Small Caps, 3.6% Yield

Amidst the recent market sell-off, value stocks may be better positioned than growth. Investors sold off stocks on Thursday following the Federal Reserve's announcement the day before that it would raise rates by 50 basis points.

Market Sell-Off May Be a Boon to Value Stocks

Value stocks have outperformed YTD. AVDV focuses on international small-cap value stocks, the cheapest equity market niche right now.

News for Avantis International Small Cap Value ETF ETF (AVDV)