Avantis builds out active suite with value and real estate equity ETFs

Oct 4th, 2021 | By | Category: Equities

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Avantis Investors has expanded its investment offering with the launch of four new ETFs on NYSE Arca.

Avantis builds out active suite with value and real estate equity ETFs

Eduardo Repetto, Chief Investment Officer, Avantis.

Three of the funds deliver exposure to value stocks while a fourth provides exposure to real estate securities. All four funds are actively managed.

They are the Avantis Emerging Markets Value ETF (AVES US), the Avantis International Large Cap Value ETF (AVIV US), the Avantis US Large Cap Value ETF (AVLV US), and the Avantis Real Estate ETF (AVRE US).

The funds are co-managed by Eduardo Repetto, Chief Investment Officer at Avantis, and senior portfolio managers Ted Randall, Mitchell Firestein and Daniel Ong.

“We are focused on putting strategies into the market where clients have asked for our help,” said Repetto. “These are important asset classes for our clients, and we’re thrilled to provide them with competitively priced, tax-efficient solutions to incorporate in their portfolios.”

The three value equity funds seek high profitability or value companies that are expected to have higher returns than the fund’s underlying performance benchmark. The managers define value companies as those with lower price-to-book-value ratios or other fundamental value. High profitability companies are defined as those with higher cash-based operating profitability.

To identify such companies, the managers use reported and estimated company financials and market data including shares outstanding, book value and its components, cash flows, revenue, expenses, accruals and income.

The real estate fund seeks securities of companies that the managers expect to have higher returns or better risk characteristics, such as companies with lower leverage. The managers note that REITs and REIT-like entities tend to distribute a large fraction of their earnings to qualify as tax passthrough entities, so it is common for REITs to have high levels of leverage to finance their growth or many of their business operations.

The managers may exclude or underweight securities with high levels of leverage with the goal of achieving a better risk/return profile, in particular in times when borrowing, refinancing, or raising capital may become more expensive for entities with high leverage, which may dilute current holders of those entities.

The funds

The Avantis Emerging Markets Value ETF invests in a portfolio of emerging markets stocks diversified across countries, sectors, industry groups and market capitalization. The fund is benchmarked for performance measurement and risk management purposes to the MSCI Emerging Markets IMI Index. It has an expense ratio of 0.36%.

The Avantis International Large Cap Value ETF invests primarily in a diverse group of non-US companies across countries, market sectors and industry groups. It is benchmarked to the MSCI World ex USA Value Index and has an expense ratio of 0.25%.

The Avantis US Large Cap Value ETF invests primarily in a diverse group of US companies across market sectors and industry groups. It is benchmarked to the Russell 1000 Value Index and has an expense ratio of 0.15%.

The Avantis Real Estate ETF invests primarily in a diverse group of real estate securities globally, in particular real estate investment trusts (REITs) and REIT-like entities.  It is benchmarked to the S&P Global REIT Index and has an expense ratio of 0.17%.

The new funds join Avantis Investors’ existing lineup of eight ETFs.

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