Avantis Emerging Markets ex-China Equity ETF (AVXC US) – Portfolio Construction Methodology

The investment process guiding the actively managed Avantis Emerging Markets ex-China Equity ETF steers a diversified equity portfolio across emerging markets while excluding China, applying a systematic, fundamentally anchored framework that emphasizes smaller, lower-relative-price and higher-profitability issuers. The universe draws from listed ordinary shares and depositary receipts that meet free-float, liquidity, and investability criteria; securities with limited trading capacity or elevated implementation costs are avoided or down-weighted. Portfolio construction is market-cap-aware with persistent multi-factor tilts, using an optimizer and trading model that balance estimated expected returns against transaction costs, country/sector concentration, and issuer limits. Position sizes reflect relative conviction and liquidity; names with diminished fundamentals or deteriorating expected returns are trimmed or sold. Rebalancing is continuous and event-driven (corporate actions, new information, flow-adjusted opportunities), with patient trading to improve execution. The approach targets broad exposure while maintaining discipline around costs, capacity and real-world tradability.

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