Avantis Investors, a subsidiary of American Century Investments, has introduced two new multi-factor equity funds which are the firm’s first ETFs to adopt socially responsible investment mandates.

The funds seek to blend a responsible investment approach with the harvesting of factor returns.
The Avantis Responsible US Equity ETF (AVSU US) and Avantis Responsible International Equity ETF (AVSD US) have been listed on NYSE Arca.
AVSU comes with an expense ratio of 0.15%, while AVSD charges 0.23%.
The funds, which are actively managed by Chief Investment Officer Eduardo Repetto and Senior Portfolio Managers Ted Randall, Mitchell Firestein, and Daniel Ong, seek to outperform the MSCI USA IMI Index and MSCI World Ex-USA IMI Index.
AVSU and AVSD start with initial universes of stocks listed in the US and on global developed markets excluding the US, respectively.
Using insights from Sustainalytics and MSCI ESG Research, Avantis first screens the universes to remove 5% of companies with the worst carbon emission profiles, firms embroiled in severe ESG-related controversies, companies with low corporate governance scores, and businesses with operations linked to oil & gas, controversial or conventional weapons, factory farming, palm oil, tobacco, cannabis, gambling, and adult entertainment.
From these reduced universes, Avantis selects and weights securities based on a systematic investment approach that favours firms with smaller market capitalizations, higher profitability ratios, and lower valuations. The process also seeks to maintain broad diversification across companies and industrial sectors in order to mitigate concentration risk.
Avantis’s approach aims to combine the benefits associated with indexing, including diversification, low turnover, transparency, and tax efficiency, with the potential to add value by incrementally harvesting factor returns through exploiting information contained in current prices.
Implementation costs are tightly controlled with the portfolio management team carefully analyzing whether the forecast benefits of a trade overcome its associated trade costs and risk.
Both ETFs make regular distributions to investors.