AVUS ETF

The AVUS ETF focuses on U.S. companies that have good valuations and strong profits, while keeping a low turnover rate and a wide range of market capitalizations. Although it has a low valuation and a competitive fee structure, AVUS has had mixed results, lagging behind some competitors over the last 3 to 5 years. The fund mainly invests in financial services and energy sectors, with less investment in high-growth technology stocks, which impacts its potential for earnings growth.

My friend and experienced professional Dave Nadig used to refer to the process of analyzing ETF asset flows as “reading the tea leaves.” I have always appreciated this metaphor because it implies that asset flows can provide insights, but they can also be understood in different ways.

Avantis US Equity ETF is an actively managed fund focused on value and profitability. The AVUS ETF is better diversified across sectors and holdings than a broad benchmark. It also shows better valuation and growth metrics. However, it has not brought significant excess return since its inception, and it has lagged passive ETFs in value and quality since 2022.

As active ETFs continue to make strides in the ETF ecosystem, certain strategies have stood out. Active funds have contributed significantly to inflows for ETFs over the last few years as investors move out of mutual funds.

Active ETFs are on the rise. More than 30 years since the arrival of the first ETF in the U.S., active ETFs are now having their moment.

Avantis US Equity ETF is an active factor-based ETF with a focus on lower-priced, higher-profitability stocks. AVUS has outperformed in the short-term, with a 12.3% 3-year average annual return compared to 9.2% for the Russell 3000 Index. However, I have some concerns on whether this outperformance is sustainable in the long run based on the performance of a similar strategy at the manager's prior firm.

"A lot of money is moving into active ETFs, because it provides the benefits that you have from active management," Avantis Investors' CIO says.

One of the essential qualities to look for when investing in exchange-traded funds (ETFs) is high risk-adjusted returns. These low-risk ETFs are welcome additions to a portfolio because they factor in the risk taken for the fund to achieve its returns.