Avantis Real Estate ETF’s Process Pillar rating is Average, but a strong management team still helps this strategy retain its Morningstar Medalist Rating of Silver. The portfolio maintains a sizable cost advantage over competitors, priced within the least expensive fee quintile among peers.  

 The strategy’s management team earns an Above Average People Pillar rating. The strategy earns an Average Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained a significant underweight position in quality exposure and volatility exposure compared with category peers. Low quality exposure is attributed to stocks with higher financial leverage and lower profitability. And low volatility exposure is rooted in stocks that have a lower standard deviation of returns. 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

Prologis

American Tower

Equinix

Welltower

Simon Property Group

Digital Realty Trust

Realty Income Corp

Public Storage

Crown Castle International

Vici Properties

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 Real Estate ETF earns an Average Process Pillar rating. 

The primary contributor to the rating is the firm's five-year retention rate of 83% over the period. The depth of the portfolio management team also supports 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 beat 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, higher-growth companies than its average peer in the Global Real Estate Morningstar Category. Examining additional factor exposure, this strategy tilts consistently toward stocks with lower quality or the shares of companies with more financial leverage and lower profitability, compared with Morningstar Category peers over the past few years. Lacking this ballast, the fund's prospects could rest on its ability to beat peers during economic booms. Different from its historical appetite, however, the Quality factor was in line with the Morningstar Category average in recent months. This strategy has also exhibited a tilt toward low-volatility stocks in recent years, meaning companies with a lower historical standard deviation of returns. These low-risk stocks are typically at their best when markets are not. Low volatility exposure contributes to limited loss on the downside at the cost of a lag in bull markets. Similarly, in recent months, the strategy also had less exposure to the Volatility factor than peers. In addition, this strategy has displayed lower yield exposure than peers, holding fewer companies with high dividend or buyback yields over recent years. Returning capital to shareholders often is not the highest priority of such businesses. The shares of such companies can deliver strong returns if they fulfill their growth projections, but they also carry more risk. In recent months, the strategy also had less Yield 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 has allocations in its top two sectors, real estate and communication services, that are similar to the category. The sectors with low exposure compared to category peers are basic materials and energy; however, the allocations are similar to the category. The portfolio is composed of 294 holdings and is quite concentrated. In particular, 39.3% of the fund’s assets are housed within the top 10 holdings, as opposed to the category’s 36.5% average. And in closing, in terms of portfolio turnover, on a year-over-year basis, 5% of the fund's holdings have changed, whether through increasing, decreasing, or changing a position.

Average

Process

Avantis Real Estate 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 2.9 stars, reflecting below-average risk-adjusted performance in comparison to category peers. Daniel C. Ong has an adequate backdrop of support, drawing on four additional listed managers, averaging seven years of listed portfolio management experience. As a team, they manage 30 investment vehicles together, with solid long-term prospects. The strategies average a Bronze asset-weighted Morningstar Medalist Rating, indicating a position to deliver positive alpha in aggregate. The team's personal investments in the fund are negligible, with the maximum investment by any one manager being between $10,000 and $50,000. That amount is too small to help align managers' interests with the fund'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 Real Estate ETF

AVRE is an actively managed fund that provides broad exposure to real estate securities around the world.

The residential real estate market will continue to be at the mercy of interest rate policy throughout 2024, but there are other corners of the real estate market to consider. One active exchange traded fund, in particular, takes a different approach to real estate.

This Active ETF Offers a Different Approach to Real Estate

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ALPS Active REIT ETF

Active REIT ETFs are a strong choice for 2024 as they can potentially offer uncorrelated returns to portfolios. REIT ETFs allow investors to gain exposure to the real estate market via a tax- and cost-efficient, highly liquid vehicle.

4 Active REIT ETFs for 2024

As the residential real estate market works itself out amid high interest rates, there are other investment opportunities that are worth noting like the actively managed Avantis Real Estate ETF (AVRE). Because of its active management strategy, AVRE's portfolio managers can tilt towards other sub-sectors within real estate that are exhibiting strength.

Housing Market Isn't Stopping This Real Estate ETF

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Alexandria Real Estate Equities

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Cousins Properties

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First Trust S&P REIT Index Fund

Franklin Street Properties Corp.

Goldman Sachs Future Real Estate And Infrastructure Equity ETF

Home Appreciation US REIT ETF

Hudson Pacific Properties

iShares Cohen & Steers REIT ETF

Life Storage

ETRACS Monthly Pay 1.5X Leveraged Mortgage REIT ETN

InfraCap REIT Preferred ETF

Paramount Group

iShares Global REIT ETF

ETFB Green SRI REITs ETF

SPDR Dow Jones REIT ETF

Global X SuperDividend REIT ETF

The REIT sector gave up most of January's big gains in February with a -6.18% total return. Small cap (-7.42%) and mid cap (-6.05%) REITs fell the furthest in February, with micro caps (-5.15%) and large caps (-4.74%) seeing smaller declines.

The State Of REITs: March 2023 Edition

Active REIT ETFs are a strong choice for 2023 as they started the year off on a high note, outpacing broader markets. Large drawdowns in global REIT's performance last year have led to higher future return potential.

4 Active REIT ETFs for 2023

Avantis Core Fixed Income ETF

Avantis U.S. Small Cap Value ETF

American Century Investments' Avantis Investors brand has performed well over the last several weeks with a suite ranging from its flows dynamos the Avantis U.S.

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With so much uncertainty looming in the markets, investors may be considering defensive plays to give them some cover entering the new year.

Looking for an Active Real Estate ETF in 2023? Try AVRE

REITs have been the top-performing asset class in eight of the past 22 years and are currently trading at substantial discounts, unveiling a compelling investment opportunity for long-term investors.  REIT values can drift from the net asset value of their underlying assets, leading to the REIT trading at premiums or discounts to NAV.

As REITs Trade at Substantial Discounts, Check Out These 4 Active ETFs

Despite interest rates rising to their highest level in recent years, real estate is still an attractive investment and hedge against inflation. Global REIT performance hasn't rebounded like traditional stock markets, and large drawdowns have led to higher future return potential.

4 Active ETFs for Adding Exposure to Real Estate in Q4

Real estate as an asset class has been favored for its low correlation with traditional stock and bond investments and ability to generate current income, as these trusts must distribute at least 90% of their income to investors, according to VettaFi.

Get Exposure to Real Estate With These 4 ETFs

Investor interest in real estate ETFs surged last month. Real estate has historically been embraced because of its ability to deliver excess returns during bull markets and low correlation with traditional stock and bond investments.

Check Out These 4 Active ETFs for REIT Exposure

Amid fears of an impending recession, mortgage rates fell to their lowest levels since April. Freddie Mac reported on Thursday that the average rate on a 30-year fixed-rate mortgage is 4.99% this week, down from 5.3% a week earlier.

Invest in Real Estate While Mortgage Rates Are Down With This ETF

After U.S. home sales rose to their highest level since 2006 last year, the Wall Street Journal is reporting that mortgage rates are rising at their fastest pace in 35 years. According to Freddie Mac, the average rate on a 30-year fixed-rate mortgage climbed to 5% as of Thursday from 3.22% in early January.

Check Out This REIT-Focused ETF Amidst Rising Mortgage Rates

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iStar Inc

Seritage Growth Properties

After back-to-back negative return months at the start of the year, REITs began the recovery process in March with a +4.93% total return.

The State Of REITs: April 2022 Edition

The real estate sector is historically vulnerable to the rising interest, which goes a long way toward explaining the group's slack start to 2022. However, some broad-based real estate benchmarks are slightly outperforming the S&P 500, and with investors still needing income due to low yields on government, there's something to be said for looking [.

News for Avantis Real Estate ETF ETF (AVRE)