Avantis Emerging Markets ex-China Equity ETF (AVXC)

Overview

The Avantis Emerging Markets ex-China Equity ETF (AVEM) seeks to provide long-term capital appreciation by investing in a broad range of emerging market companies, excluding those located in China. It aims to outperform traditional emerging market indices by focusing on companies with higher profitability and value characteristics.

Reputation and Reliability

Avantis Investors is a relatively newer firm but is backed by experienced investment professionals from Dimensional Fund Advisors. They are known for their systematic, value-oriented approach.

Management Expertise

The management team has a strong background in quantitative investing and factor-based strategies. They leverage research and data to construct portfolios that aim to deliver superior risk-adjusted returns.

Goal

The primary investment goal of AVEM is to achieve long-term capital appreciation by investing in emerging market companies, excluding China.

Investment Approach and Strategy

Strategy: AVEM does not strictly track a specific index but follows a systematic investment approach that considers factors such as profitability, value, and momentum.

Composition The ETF primarily holds stocks of companies located in emerging markets outside of China. It may also invest in derivatives to manage risk and enhance returns.

Market Share: AVEM has a growing market share within the emerging markets ex-China equity ETF category.

Total Net Assets (AUM): 1970000000

Key Competitors

• iShares MSCI Emerging Markets ex China ETF (EMXC)
• Vanguard FTSE Emerging Markets ex China ETF (VFEVX)
• Columbia EM Core ex-China ETF (CXSE)

Competitive Landscape

The emerging markets ex-China ETF market is competitive, with several established players. AVEM differentiates itself through its factor-based investment approach, focusing on profitability and value. This may lead to different performance outcomes compared to passively managed ETFs tracking a broad index. AVEM's advantage is its focus on factor tilts, but it could underperform during periods when these factors are out of favor.

Historical Performance: Historical performance data (returns, standard deviation, Sharpe ratio) should be obtained from reliable financial data providers such as Morningstar, or fund's official website.

Benchmark Comparison: Compare AVEM's performance to the MSCI Emerging Markets ex China Index to assess its effectiveness in delivering excess returns.

Expense Ratio: 0.12

Average Trading Volume

AVEM's average trading volume is moderate, indicating reasonable liquidity for most investors.

Bid-Ask Spread

The bid-ask spread is typically tight, reflecting relatively low transaction costs.

Market Environment Factors

Economic growth in emerging markets, global trade conditions, currency fluctuations, and geopolitical events can significantly impact AVEM's performance.

Growth Trajectory

AVEM's growth trajectory depends on investor demand for emerging markets ex-China exposure and its ability to consistently deliver competitive returns. The fund's strategy has remained consistent, focusing on factor-based stock selection.

Competitive Edge

AVEM's competitive advantage lies in its systematic, factor-based investment approach that seeks to identify undervalued and profitable companies. This approach differentiates it from passively managed index funds and allows for potential outperformance. The focus on profitability and value factors may lead to better risk-adjusted returns over the long term. Avantis' experienced management team and commitment to research further enhance its competitive edge.

Volatility

AVEM's volatility is comparable to other emerging market equity ETFs, reflecting the inherent risks of investing in developing economies.

Market Risk

Specific risks include political instability, currency volatility, regulatory changes, and economic downturns in emerging markets. Ex-China strategy alleviates regulatory uncertainties and geopolitical risks associated with investing in China.

Ideal Investor Profile

The ideal investor for AVEM is one seeking long-term capital appreciation with a diversified portfolio and a tolerance for emerging market risks. Investors who want to avoid China exposure would find this ETF appealing.

Market Risk

AVEM is suitable for long-term investors who believe in the growth potential of emerging markets outside of China. It can be used as a core holding in a diversified portfolio.

The Avantis Emerging Markets ex-China Equity ETF (AVEM) offers investors exposure to a diversified portfolio of emerging market companies, excluding those in China, using a factor-based approach targeting profitability and value. Its low expense ratio and systematic investment process make it a compelling choice for long-term investors. The ETF's performance is subject to emerging market risks, but its factor-based strategy aims to deliver superior risk-adjusted returns. This strategy offers a way to reduce concentration in the Chinese market and potentially improve overall portfolio diversification within the emerging markets asset class. Investors should consider their risk tolerance and investment horizon before investing.

Data Sources:

• Avantis Investors website
• Morningstar
• ETF.com
• Bloomberg

Disclaimers:

The information provided is for informational purposes only and does not constitute financial advice. Investment decisions should be based on individual circumstances and consultation with a qualified financial advisor. Past performance is not indicative of future results. Market share data is estimated and may vary.