Avantis bolsters factor-enhanced ETF line-up

Nov 13th, 2023 | By | Category: Equities

Avantis Investors, a subsidiary of American Century Investments, has rolled out a trio of new ETFs that seek to capture alpha by incrementally harvesting factor risk premia within US mid-cap and emerging market small-cap equities.

Avantis bolsters factor-enhanced ETF line-up

The ETFs seek to generate incremental alpha by harvesting multiple factor risk premia.

Listed on NYSE Arca, the three new funds are the Avantis US Mid Cap Equity ETF (AVMC US), which comes with an expense ratio of 0.18%; the Avantis US Mid Cap Value ETF (AVMV US), which has an expense ratio of 0.20%; and the Avantis Emerging Markets Small Cap Equity ETF (AVEE US), which costs 0.42%.

All three ETFs are actively managed by Avantis Chief Investment Officer Eduardo Repetto, Senior Portfolio Managers Mitchell Firestein, Daniel Ong, Ted Randall, and Portfolio Manager Matthew Dubin.

AVMC invests across a broad range of US mid-cap companies; AVMC focuses more narrowly on US mid-caps trading at lower valuations; and AVEE diversifies broadly across small-cap companies in emerging markets.

The selection and weighting of securities in each portfolio are based on a systematic investment approach that favours firms with relatively smaller market capitalizations, higher profitability ratios, and lower valuations. The approach is designed to maintain broad diversification across countries (in terms of the emerging markets strategy), industrial sectors, and companies in order to mitigate concentration risk.

Implementation costs are tightly controlled with the funds’ management carefully analyzing whether the forecast benefits of a trade overcome its associated trade costs and risk.

According to Avantis, the approach combines the benefits associated with indexing, including diversification, low turnover, transparency, and tax efficiency, with the potential to add value by making investment decisions using information contained in current prices.

Phil McInnis, Chief Investment Strategist at Avantis Investors, commented: “Our suite of funds continually evolves to meet investor needs. With over $9 billion in net inflows year-to-date, our strategies are resonating well with investors. As demand grows, we remain committed to innovating and providing new solutions.”

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