Active Small-Cap Value ETF Integration into Your Investment Portfolio - AVUV Insight
Avantis US Small Cap Value ETF Attracts $17 Billion in Assets and Delivers Strong Performance
The Avantis US Small Cap Value ETF (NYSEARCA: AVUV) has been making waves in the investment world, attracting over $17 billion in assets since its inception in October 2019. This ETF, managed by American Century Investment Management, has delivered above-average returns, with a 13.23% annualized gain.
AVUV's primary investment objective is long-term capital appreciation. It achieves this by investing in a diversified basket of high-quality small-cap stocks trading at cheap valuations. The ETF's composition is divided between small- and micro-caps, with no exposure to the "giant" and "large" categories. This strategy allows AVUV to focus on companies with significant growth potential.
One of the key factors contributing to AVUV's success is its low expense ratio, which is the ninth-lowest among the 35 small-cap value ETFs the author tracks. This efficiency helps to maximise returns for investors.
AVUV's EBIT margins, net margins, return on equity, return on total capital, and return on assets figures are all above average, demonstrating the ETF's ability to generate strong profits from its investments.
In terms of risk, AVUV's maximum drawdown in Q1 2020 was 42.43%, and its elevated 27.10% annualized standard deviation figure suggests it is riskier than its peers. However, AVUV's 0.34 long-term debt-to-total capital ratio suggests there are few balance sheet issues to worry about.
AVUV's sector diversification score is 5.86/10, with 78% allocated to four sectors: Consumer Discretionary, Energy, Financials, and Industrials. This diversification helps to spread risk and capitalise on opportunities across various industries.
Compared to other small-cap value ETFs, AVUV's cumulative return from January 2020 to July 2022 ranks #1, with a 85.62% total return. AVUV's 11.74x forward P/E ratio is the lowest among the five small-cap value ETFs compared, indicating undervalued stocks in its portfolio.
The overlap between AVUV and other small-cap value ETFs such as IJS, IWN, VBR, and DFAT is relatively low, providing AVUV with a unique investment profile. For instance, the overlap between AVUV and DFAT is only 39%, allowing AVUV to offer a distinct set of investment opportunities.
It's worth noting that DFAT is the only fund with a positive three-year historical earnings per share growth rate among the five small-cap value ETFs compared. However, DFAT's cumulative return from January 2020 to July 2022 is about 20% behind AVUV's, with a 65.46% total return.
AVUV benchmarks against the Russell 2000 Value Index. Its portfolio managers use reported and/or estimated company financials and market data for stock selection, ensuring a data-driven approach to investment decision-making.
Lastly, AVUV offers a trailing dividend yield of 1.67%, providing investors with a steady income stream in addition to the potential for capital appreciation.
In conclusion, the Avantis US Small Cap Value ETF has proven to be a strong performer in the small-cap value ETF space, delivering above-average returns and offering a unique investment profile. Its focus on high-quality small-cap stocks trading at cheap valuations, combined with a low expense ratio and efficient use of assets, makes it an attractive option for investors seeking long-term capital appreciation.
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