Avantis Emerging Markets Equity Fund is a well-diversified strategy with some mild but advantageous factor tilts. The management team's consistency in delivering this fund's intended risk exposures warrants a People Pillar upgrade to Above Average from Average.
The portfolio managers at Avantis build this portfolio from a wide swath of stocks from more than 15 emerging markets. They strategically overweight more profitable names and those trading at lower price/book ratios by scaling each stock's market-cap weight by a multiplier. They assign larger multipliers to stocks with lower valuations and higher profitability, while those with the opposite characteristics receive smaller multipliers. This technique has two advantages. It effectively emphasizes factors that should have stronger performance over the long run while simultaneously cutting back on turnover and trading costs. Overall, this is one of the best diversified and lowest turnover portfolios in the diversified emerging markets Morningstar Category.
The portfolio’s emphasis on stocks with lower valuations has been persistent. But its preference for profitable firms has been less obvious because cheaper stocks tend to be less profitable than their larger and faster-growing counterparts. However, incorporating profitability paints a more complete picture of each stock's expected return, and it should steer the portfolio away from risky names with poor earnings.
Despite those benefits, political risks are more prominent in these markets than developed economies. Russia’s invasion of Ukraine is a recent example that brought such risks to the forefront. Shortly after the invasion, the prices of most Russian stocks rapidly declined as many countries imposed sanctions. Russian stocks represented a little less than 3% of the fund before these events transpired, so the impact on performance was muted.
The portfolio’s emphasis on stocks trading at lower valuations has been an advantage over the past few years. It outperformed the MSCI Emerging Markets Index by 5.4 percentage points per year between November 2020 and May 2023 as global markets recovered from the COVID-19 drawdown. Avantis charges 0.33% for the mutual fund and ETF versions of this portfolio. That fee lands in the cheapest decile of the category and should provide a long-term edge.

Analyst Rating

A broad portfolio that leans toward value.

Senior Analyst

Daniel Sotiroff

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JPMorgan BetaBuilders Canada ETF

AngloGold Ashanti

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Fisker

Premier Financial

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This broad emerging markets portfolio emphasizes cheaper and more profitable names. It is still exposed to the political risks endemic to many emerging markets, earning an Average Process Pillar rating.

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 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 managers 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 managers 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.

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 Equity ETF

AVEM is an actively managed fund that holds emerging-market stocks of all market capitalizations considered favorable on multiple factors. The fund seeks to provide capital appreciation.

Avantis Emerging Markets Equity ETF AVEM is probably on the radar for investors seeking momentum. The fund just hit a 52-week high and moved up 17.06% from its 52-week low price of $50.65/share.

Emerging Market ETF (AVEM) Hits New 52-Week High

CSOP FTSE China A50 ETF

Xtrackers Harvest CSI 300 China A-Shares ETF

Xtrackers Harvest CSI 500 China A-Shares Small Cap ETF

Xtrackers MSCI China A Inclusion Equity ETF

Avantis Emerging Markets Value ETF

VanEck Vectors Brazil Small-Cap ETF

Direxion Daily MSCI Brazil Bull 2X Shares

ProShares UltraShort MSCI Brazil Capped

Morgan Stanley China A Share Fund Inc

Direxion Daily CSI 300 China A Share Bull 2X Shares

VanEck Vectors ChinaAMC SME-ChiNext ETF

iShares MSCI China A ETF

WisdomTree China ex-State-Owned Enterprises Fund

Xtrackers MSCI Emerging Markets Hedged Equity ETF

Dimensional Emerging Markets Value ETF

Franklin Emerging Market Core

Direxion Daily Emerging Markets Bull 3X Shares

Direxion Daily Emerging Markets Bear 3X Shares

iShares MSCI Emerging Markets ETF

ProShares Ultra MSCI Emerging Markets

ProShares UltraShort MSCI Emerging Markets

Xtrackers Emerging Markets Carbon Reduction and Climate Improvers ETF

Templeton Emerging Markets Fund

Global X Next Emerging & Frontier ETF

iShares MSCI Emerging Markets ex China ETF

WisdomTree India Earnings Fund

iShares MSCI EM ESG Optimized ETF

ProShares Short MSCI Emerging Markets

iShares MSCI Brazil ETF

iShares MSCI Brazil Small-Cap ETF

First Trust Brazil AlphaDEX Fund

First Trust Emerging Markets AlphaDEX Fund

Franklin FTSE Brazil ETF

Franklin FTSE India ETF

iShares MSCI Frontier 100 ETF

Freedom 100 Emerging Markets ETF

iShares Currency Hedged MSCI Emerging Markets ETF

iShares Core MSCI Emerging Markets ETF

Morgan Stanley India Investment Fund Inc

Columbia India Consumer ETF

iShares MSCI India ETF

Nifty India Financials ETF

Direxion Daily MSCI India Bull 2X Shares

iShares India 50 ETF

JPMorgan Emerging Markets Equity Core ETF

KraneShares MSCI All China Index ETF

KraneShares Bosera MSCI China A Share ETF

KraneShares SSE STAR Market 50 Index ETF

iShares ESG MSCI EM Leaders ETF

PIMCO RAFI Dynamic Multi-Factor Emerging Markets Equity ETF

First Trust India NIFTY 50 Equal Weight ETF

Invesco India ETF

First Trust RiverFront Dynamic Emerging Markets ETF

Hartford Multifactor Emerging Markets ETF

Schwab Emerging Markets Equity ETF

iShares MSCI India Small Cap ETF

SPDR Portfolio Emerging Markets ETF

Vanguard FTSE Emerging Markets ETF

WisdomTree Emerging Markets ex-State-Owned Enterprises Fund

Emerging markets continued to expand at a solid pace midway into the first quarter of 2024, supported by broad-based expansion across both manufacturing and service sectors.

Emerging Markets Growth Remains Solid Amid Intensifying Inflationary Pressures

Avantis International Equity ETF

Avantis All Equity Markets ETF

Avantis International Large Cap Value ETF

Avantis US Large Cap Value ETF

Avantis US Equity ETF

Large caps dominated in 2023. But as investors continue to seek opportunities in 2024, international equities could be extending last year's rally.

Get Worldwide Equities Exposure in the Convenience of One ETF

Avantis International Small 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

Avantis U.S. Small Cap Value ETF

Vanguard Total Bond Market ETF

Capital Group Dividend Value ETF

Capital Group Growth ETF

Dimensional US Core Equity 2 ETF

Dimensional International Core Equity Market ETF

Dimensional Core Fixed Income ETF

Dimensional Emerging Markets Core Equity 2 ETF

Dimensional International Core Equity 2 ETF

Dimensional International Value ETF

Dimensional US Equity ETF

Dimensional US High Profitability ETF

Fidelity Total Bond ETF

First Trust TCW Opportunistic Fixed Income ETF

Janus Henderson AAA CLO ETF

JPMorgan Equity Premium Income ETF

JPMorgan Nasdaq 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® Emerging Markets Equity ETF strategically invests in China, Taiwan, India and South Korea; with strategic allocation in specific high-growth sectors of each of these markets. As the U.S. has a steep hike in inflation rate as compared to these Emerging Markets, this is leading to an exchange rate that is favoring investments in them. Due to their strong financial sectors, emphasis on technology, and willingness to adopt AI, these EMs may fast become a safe haven for global investors.

AVEM: An EM Fund Investing In Lucrative Segments Of High-Growth Markets

Emerging Markets Funds are made up of funds that seek long-term capital appreciation. Nigeria and Emerging Markets Europe have been the two areas that have seen the highest year-to-date and May returns. With the U.S. looking to pause rate hikes, we may see inflows coming back to domestic funds.

Emerging Markets Funds See Top 10 Weekly Outflow On Record

U.S. equities have been somewhat surprising so far this year, with a birfucated tech market lifting up the overall stock market behind some strong performers. That may not be able to last, however, especially with a looming recession and a stubborn attrition fight between inflation and interest rates.

Rising Emerging Markets ETF AVEM Hits $3 Billion

AVEM consists of stocks within emerging markets located in countries like China, Taiwan, and India. Many emerging countries initiated rate-hiking cycles before the United States and therefore may be better positioned for growth in the near future as the United States remains under inflationary pressure.

AVEM: Emerging Markets Stepping Up As The United States Continues To Fight Inflation

The start of earnings season proper provides investors with the opportunity to take stock and reassess how certain themes might be primed to perform for the rest of the year.

Watch These ETFs as EM Equities Are Poised to Rebound

In a complicated quarter of 2023 so far, there have been a few investing styles and themes that have stood out as more durable than the others despite rising rates and bank crisis volatility.

Don't Miss Out as Emerging Markets Value ETF Signals Buy

Avantis Responsible Emerging Markets Equity ETF

Entering 2023, markets had reason for a dour perspective — a brutal 2022 market selloff and all kinds of uncertainty have loomed on the horizon for weeks now.

Play Emerging Markets Upside in AVSE, AVEM ETF Duo

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

American Century Quality Diversified International ETF

International equities gained Thursday, with emerging markets and related exchange traded funds taking charge as updated Chinese economic growth data fueled expectations of more liquidity. Chinese stocks, which make up the lion's share of major emerging market benchmarks, rallied as investors looked to more liquidity measures from the People's Bank of China, following second quarter [.

Emerging Market ETFs Break Out

China's imports and exports grew in June at a faster pace than expected, as reported by the Wall Street Journal, portending continued economic growth in a country still mired in Covid-19 outbreak fears.  Exports for the country increased 32.2% over last year (measured in U.S. dollars), continuing May's upward trend of 27.9% growth.

China's Rising Exports Bolster This Emerging Markets Equity ETF

Rising commodity prices could support the developing market outlook, along with related exchange traded funds. Market strategists believe that emerging market currencies could find support from higher commodity prices, projecting that emerging currencies tied to commodity-exporting countries could outperform the U.S. dollar over the next year, Reuters reports.

Higher Commodity Prices Could Boost EM Currencies, ETFs

Invesco BLDRS Emerging Markets 50 ADR Index Fund

SPDR MSCI Emerging Markets Fossil Fuel Free ETF

Vrts Gt Emg Mrk Shs

Guggenheim Shs MSCI Emerging Markets Equal Country Weight

Franklin LibertyQ Emerging Markets ETF

Invesco RAFI Strategic Emerging Markets ETF

Morgan Stanley Emerging Markets Fund Inc

Price swings have been dramatic. For example, we've seen 8 +/- 4% absolute moves in the MSCI Emerging Markets Index in the last two weeks of March.

Navigating Emerging Markets During Uncertain Times: This Too Shall Pass

News for Avantis Emerging Markets Equity ETF ETF (AVEM)