Avantis US Small Cap Equity 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 lowest 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 considerable overweight position in volatility exposure and has a substantial underweight in yield exposure compared with category peers. High volatility exposure is attributed to companies with a higher standard deviation of returns. And a low yield exposure is rooted in holding fewer stocks with high dividend or buyback yields -- instead, typically holding stocks in an early stage of development. 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

SkyWest

Boot Barn Hlds

Abercrombie & Fitch

Modine Manufacturing

Atlantic Union Bankshares Corp

Archrock

International Seaways

Kratos Defense & Security Solutions

InterDigital

WSFS Financial

Morningstar's evaluation of this security's process aims to determine the likelihood that it will outperform its Morningstar Category benchmark on a risk-adjusted basis over the long term. Avantis US Small Cap Equity ETF earns an Average Process Pillar rating. 

The leading factor in the rating is the firm's five-year retention rate of 83% 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 relatively low success ratio suggests that the firm could do better across its fund lineup.

 This strategy tends to pick smaller market-cap firms compared with the average fund in its peer group, the Small Value Morningstar Category.  But in terms of style (value/growth) exposure, it is similar. Analyzing additional factors, the managers have continually shown a willingness to take risks over the last few years, demonstrated by the portfolio's high volatility exposure. Such stocks tend to rise faster and fall harder than the broad market. High-volatility exposure contributes to stronger performance during bull markets, but often at the cost of losing more during downturns. In recent months, the strategy was more exposed to the Volatility factor compared with its Morningstar Category peers as well. This strategy also has had lower yield exposure than peers over these years; its portfolio has held fewer stocks with high dividend or buyback yields. Its preference for stocks with lower yields may well lead to a growthier portfolio. However, growth stocks court additional risks if their forecasts do not come to fruition and are often more volatile than companies with stable dividends. Similarly, in recent months, the strategy also had less exposure to the Yield factor than peers. Additionally, the strategy has demonstrated a contrarian approach with relatively low exposure to momentum stocks during these 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. Nevertheless, the fund's Momentum exposure was in line with peers in the latest month. 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 healthcare by 7.9 percentage points in terms of assets compared with the category average, and its communication services allocation is similar to the category. The sectors with low exposure compared to category peers are real estate and energy, with real estate underweighting the average portfolio by 4.6 percentage points of assets and energy similar to the average. The strategy owns 1,313 securities and its assets are more dispersed than peers in the category. In particular, 4.0% of the strategy's assets are concentrated in the top 10 fund holdings, compared to the category average's 28.1%. And finally, in terms of portfolio turnover, on a year-over-year basis, 9% of the fund's holdings have turned over, whether through increasing, decreasing, or changing a position.

Average

Process

Avantis US Small Cap Equity 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, indicating that their risk-adjusted returns have been in line with the category average. 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 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. With at least one manager investing $1 million or more in this offering, investors can have some assurance that the team's interests are aligned with theirs. 

 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 US Small Cap Equity ETF

AVSC is an actively-managed portfolio of US small-cap value companies selected based on fundamental criteria.

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Actively managed equity ETFs are gaining traction in 2024. Despite representing 5% of assets, they have pulled in more than 25% of the net inflows this year as of late March.

Taking an Active Stance on Small Caps

The Avantis US Small Cap Equity ETF is an actively managed ETF that primarily invests in a diverse group of U.S. small cap companies. The Fund has over 1,300 holdings and is heavily weighted toward the Financial sector. While the Fund has performed well relative to the small cap indexes, competitor ETFs with more concentrated portfolios have outperformed the Fund.

AVSC: Better Options Available

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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 U.S. Small Cap Value ETF

As investors shore up their portfolios ahead of 2024, they may want to consider small-cap equities. That area could be presenting an exceptional value proposition that could prosper next year.

Small-Cap Equities Currently Offering Exceptional Value

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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

Large cap equities have been leading the 2023 market rally with the S&P 500 up 15%, but at some point, small cap equities will follow suit. Here are a pair of active exchange traded fund (ETF) options worth considering to get exposure to a small cap rally.

Two Active Options to Play a Small Cap Comeback

Avantis Investors launched the Avantis International Small Cap Equity ETF (NYSE Arca: AVDS) on the New York Stock Exchange today. The active fund invests in a diverse group of non-U.S. small-cap companies across market sectors, industry groups, and countries.

Avantis Launches New Active International Small-Cap ETF

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Small-cap stocks and ETFs have been gaining strength lately on the signing of the debt deal, upbeat U.S. jobs data and chances of no rate hike this week.

4 Reasons to Bet on Small-Caps ETFs

With the Russell 2000 up just over 3% year-to-date versus the S&P 500's 12%, the environment may not be quite right for a small-cap rebound just yet, but investors can still capture the early momentum prior to a big rebound with exchange traded funds (ETFs) such as the Avantis U.S Small Cap Equity ETF (AVSC).

Consider This Active ETF for a Small-Cap Rebound

Amid geopolitical tensions with China and lessons learned from the supply chain shocks endured as a result of the coronavirus pandemic, among other factors, the movement to reshore more formerly American industry is gaining momentum.

Reshoring Movement Could Be Small-Cap Catalyst

Are small caps the place to be right now? They look like better value than the S&P 500 itself, which, in an environment that seems to vacillate wildly between soft-landing optimism and hard-landing, Fed-induced recession pessimism, is certainly worth taking a look at.

Don't Miss Small Cap Opportunity in AVUV, AVSC

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Energy Stock Pays Off Richly In A Market Searching For High Yield

A small-cap comeback could be brewing as inflation fears may have already taken their toll. If so, there are a couple of options to consider when it comes to looking at small-cap-focused exchange traded funds (ETFs).

A Pair of ETFs to Play a Small-Cap Comeback

With risk-off sentiment permeating markets, investors may not be rushing to consider small-cap stocks and the related exchange traded funds. Conversely, this could prove to be the opportune time to evaluate small-cap ETFs, including new additions to that landscape such as the Avantis U.S. Small Cap Equity ETF (NYSE Arca AVSC).

New Small-Cap ETF Worth a Look

Avantis Investors, a $9.2 billion investment offering backed by American Century Investments, today announced the launch of its latest exchange traded fund, the Avantis U.S. Small Cap Equity ETF (NYSE Arca AVSC). Available to trade today on the New York Stock Exchange, AVSC relies on a proprietary systematic investment approach that combines the latest in [.

News for Avantis US Small Cap Equity ETF ETF (AVSC)