Avantis Emerging Markets Sm Cp Eq ETF’s Process Pillar rating is Average, but a strong management team still helps this strategy retain its Morningstar Medalist Rating of Bronze. The portfolio maintains a cost advantage over competitors, priced within the cheapest fee quintile among peers.  

 The strategy’s management team earns an Above Average People Pillar rating. The strategy gets an Average Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained a significant overweight position in liquidity exposure and momentum exposure compared with category peers. High liquidity exposure is attributed to stocks with a high trading volume, lending managers more flexibility. And low momentum exposure is rooted in holding stocks that are not currently on a winning streak and instead holding those that managers believe are undervalued. The strategy's parent organization earns the firm an Average Parent Pillar rating. People Pillar and Parent Pillar ratings for this strategy are indirectly assigned by a Morningstar analyst rather than algorithmically derived. Please see the notes following each pillar section for more details. The details of assigning methods can be found in each pillar section.

Analyst Rating

SAP SE

HollySys Automation Technologies

PagSeguro Digital

TransGlobe Energy

Membership Collective Group

Coterra Energy

Aegion

Meritage Homes

Nuveen Connecticut Quality Municipal Income Fund of Benef Int

DCP Midstream

Morningstar's evaluation of this security's process aims to determine the likelihood that it will outperform its Morningstar Category index on a risk-adjusted basis over the long term. Avantis Emerging Markets Sm Cp Eq ETF earns an Average Process Pillar rating. 

The leading factor in the rating is the firm's five-year retention rate of 84% over the period. The scale of the portfolio management team also contributes to the process. With five portfolio managers, the fund is well-staffed. Lastly, the process is limited by the parent firm's five-year risk-adjusted success ratio of 51%. The measure indicates the percentage of a firm's funds that survived and outperformed their respective category's median Morningstar Risk-Adjusted Return for the period. The parent's subpar success ratio suggests that the firm could do better across its fund lineup.

 This strategy tends to hold smaller, deeper value companies than its average peer in the Diversified Emerging Mkts Morningstar Category. Analyzing additional factors, the fund has held stocks with higher trading volumes compared to Morningstar Category Peers in the past few years. More-liquid assets are easier to buy and sell without adversely moving their prices and tend to provide some ballast during market selloffs. They also are easier to sell to meet redemptions if a host of investors decide to leave the fund in a short period of time. In recent months, the strategy was more exposed to the Liquidity factor compared with its Morningstar Category peers as well. This strategy has also demonstrated a bias towards lower-momentum stocks over its peers over the past years. Momentum tends to be a powerful force in asset markets, as stocks that have done well recently usually continue to do so in the short term. As top performers change, this can sometimes be hard to capture without higher trading costs. Similarly, in recent months, the strategy also had less exposure to the Momentum factor than peers. This strategy also has tilted toward low-quality stocks, companies with higher financial leverage and lower profitability over these years. Lacking this ballast, the fund's prospects could rest on its ability to beat peers during economic booms. In recent months, the strategy also had less Quality factor exposure than its peers. More information on a fund and its respective category's factor exposure can be found in the Factor Profile module within the Portfolio section. 

 The portfolio is overweight in industrials and basic materials relative to the category average by 13.0 and 6.2 percentage points, respectively. The sectors with low exposure compared to category peers are financial services and technology, underweight the average by 15.4 and 5.5 percentage points of assets, respectively. The strategy owns 1,383 securities and its assets are more dispersed than the typical peer in the category. In the most recent disclosure, 5.9% of the portfolio's assets were concentrated in the top 10 fund holdings, compared to the category average's 25.4%.

Average

Process

Avantis Emerging Markets Sm Cp Eq ETF earns an Above Average People Pillar rating. Daniel C. Ong’s veteran status, with 19 years of listed portfolio management experience, brings a wealth of experience to the table. The average Morningstar Rating of the strategies they currently manage is 3.1 stars, demonstrating average risk-adjusted performance. Daniel C. Ong draws on a supporting cast of four additional listed managers. Together they average seven years of listed portfolio management experience. As a team, they manage 31 investment vehicles together, with a Bronze asset-weighted average Morningstar Medalist Rating, indicating the potential to deliver positive alpha in aggregate. None of the portfolio managers here invest in this fund. This hurts the rating because manager investment would align their interests with the strategy's investors. 

 Note: The People Pillar rating is indirectly assigned by an analyst. The longest-tenured manager of the fund also manages a different product rated by an analyst. Their analyst-assigned People Pillar rating is combined here with the People scores (algorithmic or analyst-assigned) for the fund’s other managers on a tenure-weighted basis.

Above Average

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.

Parent

Avantis Emerging Markets Small Cap Equity ETF

AVEE seeks long-term capital appreciation through an actively managed portfolio of small-cap companies in the emerging market equity space, selected based on fundamental criteria.

Avantis Emerging Markets Value ETF

Dimensional Etf Trust-Dimensional Emerging Markets High Profitability Etf

Dimensional Emerging Markets Value ETF

iShares MSCI Emerging Markets Small Cap ETF

iShares JP Morgan USD Emerging Markets Bond ETF

Overseas markets, particularly emerging markets, are expected to offer the best stock returns over the next decade. EM stocks trade at historically low valuations compared to the US and other international stocks.

The Case For Emerging Markets

Avantis International Small Cap Equity ETF

Avantis US Small Cap Equity ETF

Large cap dominance was the highlight of the 2023 market rally, but small cap equities could pick up where their large cap counterparts left off for the remainder of 2024.

Small Cap Equities Offering Value Compared to Large Cap Peers

Avantis US Large Cap Equity ETF

Avantis US Mid Cap Equity ETF

Avantis US Mid Cap Value ETF

American Century Investments subsidiary Avantis Investors has listed three new active equity ETFs on the New York Stock Exchange. All three funds emphasize companies with smaller market caps and higher profitability and value characteristics.

Avantis Rolls Out 3 Active Equity ETFs

KANSAS CITY, Mo. , Nov. 9, 2023 /PRNewswire/ -- Today, Avantis Investors ®, a $28 billion* investment offering from global asset manager American Century Investments®, continues to grow its exchange traded fund (ETF) platform with the listing of three new ETFs: Avantis U.S. Mid Cap Equity ETF (AVMC), Avantis U.S. Mid Cap Value ETF (AVMV) and Avantis Emerging Markets Small Cap Equity ETF (AVEE).

News for Avantis Emerging Markets Small Cap Equity ETF ETF (AVEE)