Avantis Investors is a new arrival in investment town. Its freshness does not in any way detract from its capability or performance as it has been founded by ex-staffers of Dimensional Fund Advisors, considered to be factor tilt fund experts. Avantis ETFs are becoming more popular daily, so I decided to take a look at the top 5 Avantis ETFs.
It is perhaps a result of the experience of its founders with Dimensional, Avantis offers appreciable factor exposure in a reliable manner and at a low cost, much like Dimensional would, especially for size, profitability and value. Avantis goes one up on Dimensional by providing all-cap, broad market exposure, much like the new Dimensional ETFs, and then topping them up with a few more that provide small-cap value.
In another parallel with Dimensional, the basis for Avantis decisions on weighting and overweighting stocks that would drive returns is academic research. Armed with this fundamental strength, Avantis can be expected to deliver market-beating returns while limiting long-term portfolio risk.
With a track record of over a year now, Avantis can be purchased through all major brokers. This note seeks to introduce investors to the opportunities presented by 5 of their funds.
Table of Contents
Introduction – Avantis ETFs
Avantis provides low-cost but highly reliable factor exposure specifically for Size, Value, and Profitability. Quantity fund advisors are considered an excellent value for investors with factor tilt funds. Just as Dimensional draws on the most robust academic research to overweight driving factors of return that we expect to both beat the market and mitigate portfolio risk over the long. Let’s see Avanti s new ETF: Emerging and Developed Markets, U.S.. developed markets, and Small-Cap Value. Avantis stocks this plus a few in particular for small-cap prices. Dimensional’s ETFs offer a limited, market-friendly market exposure only.
Where can I buy Avantis ETFs?
Currently, Avantis ETFs are available from major traders. M1 Finance has no commission or accounts fee. The broker features fractional shares, dynamic rebalanced data, intuitive charting, and a smooth user-friendly user interface and mobile app. Information in these web pages is solely for information purposes and for recreational use only. It is not recommended to buy, sell or otherwise transact in any of said goods. Past performance does not guarantee a future return!
Avantis US Equity ETF (AVUS)
Outperforming the S&P 500 index in its short existence of under 2 years is a great starting point for AVUS. It manages about a billion dollars in assets across 2,000 holdings and has been able to keep expense ratios at 0.15%.
AVUS could be visualized as a US stock market indexed fund built on the best research available and one that could be expected to deliver better-than-market returns over an extended period while lowering the risk and volatility exposure of investors.
AVUS bears a slight tilt towards profitability and value, in other words, stocks with high profitability and low relative price. It is also positively loaded in a small way to size, which makes its average market cap lower than the market. Otherwise, it has broad exposure to the US market.
Avantis International Equity ETF (AVDE)
Focused on the ex-US developed markets, AVDE has an expense ratio of 0.23%. It looks very similar to Vanguard’s established VEA which has a fee of only 10 basis points. Hence, the value of AVDE at its higher price needs to be questioned. It might just be simpler to stick to tried and trusted VEA.
Avantis Emerging Markets Equity ETF (AVEM)
There are many fans of overweighting emerging markets in their portfolio for the benefit of diversification, as developed markets tend to closely mirror the US and take away the diversification benefit. The Avantis approach to emerging markets is visible in this fund.
AVEM looks quite similar to the VWO of Vanguard, costing 10 basis points. XSOE of Wisdom Tree is another attractive fund in a similar space, which captures profitable smaller companies in its ambit while pursuing exposure to size, profitability, and investment which may be construed as a conservative investment approach.
Between the three, AVEM, with an expense ratio of 0.33%, is the highest.
Avantis U.S. Small Cap Value ETF (AVUV)
AVUV has its sights set on undervalued stocks with strong financials, fundamentals of investing in a way, of small caps.
In its brief period of existence, AVUV has been able to achieve a superior exposure to the value and profitability factors in comparison to the S&P SmallCap 600 Value Index (as reflected in IJS, VIOV, or SLYV) which has been the reference point for a reflection of the value of US small-caps.
AVUV emerges as a clear winner in this group and looks like a worthwhile investment even at its higher expense ratio of 0.25%.
Avantis International Small Cap Value ETF (AVDV)
In simple terms, AVDV can be considered as the global equivalent of AVUV, with its focus on small caps with locked value in terms of strong financials and undervaluation. It focuses on non-US markets. It currently has assets of $500 million under management and an expense ratio of 0.36%.