Avantis International Small Cap Value ETFNYSE American: AVDV

Many investors have parked significant assets in cash over the last year, farming significant yields therein. Of course, with rate cuts having arrived, the cash outlook has changed.

AVDV aims to outperform the MSCI World ex-U.S. Small Cap Index by selecting profitable, undervalued companies within the same universe. The value factor for this fund is more sophisticated than most funds that are supposed to be "value" and the small-cap space as the hunting ground seems promising. The fund has realized a price return of 3.51% per year in the last 3 years, greatly outperforming its benchmark, which reflected negative returns.

Avantis Investors' ETF providing access to international small caps is seeing notable interest. The Avantis International Small Cap Value ETF (AVDV) has seen strong inflows as investors look to add active exposure to non-U.S. developed small-cap companies.

Many investors are considering diversifying away from the U.S. While the domestic stock market remains strong, it is also quite expensive. What's more, concentration risk as the U.S. stock market relies on just a handful of firms puts portfolios and the broader stock market at risk.

Something's happening abroad that hasn't in a long time.

Wall Street experienced a robust upswing last month, defying the famous adage "Sell in May". The rally was driven y strong corporate results, and the artificial intelligence craze.

The Avantis International Small Cap Value ETF is a good choice for investors looking to capitalize on market shifts towards international small-value stocks. AVDV provides a varied selection of non-U.S. developed small-cap companies that are undervalued and have strong profitability metrics. Unlike other ETFs, this fund combines passive indexing with strategic investment decisions based on real-time market conditions.

With the expectation of Federal Reserve rate cuts to come this year, global central banks could also follow suit. This could pave the way for international equities to run higher, giving investors upside while also getting diversified exposure.

An initial lull ahead of a so-called “January Effect” is stifling the U.S. equities rally investors saw in 2023 and small caps haven't been immune. Nonetheless, active strategies can help mute the short-term downside by adding flexibility when markets fluctuate.