Avantis International Small Cp Eq ETF’s Process Pillar rating is Average, but a strong management team still helps this strategy retain its Morningstar Medalist Rating of Bronze. The portfolio maintains a cost advantage over competitors, priced within the lowest fee quintile among peers.  

 The strategy’s management team earns an Above Average People Pillar rating. The strategy earns an Average Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained an underweight position in liquidity exposure and has a significant underweight in momentum exposure compared with category peers. Low liquidity risk exposure is attributed to stocks with a low trading volume, limiting managers' flexibility. And low momentum exposure is rooted in holding stocks that are not currently on a winning streak and instead holding those that managers believe are undervalued. The strategy's parent organization earns the firm an Average Parent Pillar rating. People Pillar and Parent Pillar ratings for this strategy are indirectly assigned by a Morningstar analyst rather than algorithmically derived. Please see the notes following each pillar section for more details. The details of assigning methods can be found in each pillar section.

Analyst Rating

Blackrock Income Trust

Celestica

Alamos Gold

Summit Materials

SPDR SP Int Stp Shs

Veren Inc.

Colliers International Group

NexTier Oilfield Solutions Inc

Physicians Realty

Franklin Resources

Morningstar's evaluation of this security's process aims to determine the likelihood that it will outperform its Morningstar Category benchmark on a risk-adjusted basis over the long term. Avantis International Small Cp Eq ETF earns an Average Process Pillar rating. 

The most notable contributor to the rating is the firm's five-year retention rate of 84% over the period. The size of the portfolio management team also bolsters the process. With five portfolio managers, the fund is well-staffed. Lastly, the process is limited by the parent firm's five-year risk-adjusted success ratio of 51%. The measure indicates the percentage of a firm's funds that survived and beat their respective category's median Morningstar Risk-Adjusted Return for the period. The parent's modest success ratio suggests that the firm could do better across its fund lineup.

 This strategy skews toward smaller, more undervalued companies than its average peer in the Foreign Small/Mid Blend Morningstar Category. Looking at additional factor exposure, this strategy continually held some stocks with low trading volume over the last few years. Less-liquid stocks might offer strong returns to compensate for their risks, but they can be harder and more expensive to trade in bear markets. In the latest month, the strategy was also less exposed to the Liquidity factor compared with Morningstar Category peers. This strategy has had lower exposure to momentum stocks over peers in recent years. Momentum investors tend to expect stocks that have done well recently to continue to do so in the short term. Momentum approaches can entail higher turnover and trading costs since the top stocks can often change. Similarly, in recent months, the strategy also had less exposure to the Momentum factor than peers. This strategy also has tilted toward low-quality stocks, companies with higher financial leverage and lower profitability over these years. Lacking this ballast, the fund's prospects could rest on its ability to surpass peers during economic booms. In recent months, the strategy also had less Quality factor exposure than its peers. More information on a fund and its respective category's factor exposure can be found in the Factor Profile module within the Portfolio section. 

 The portfolio is overweight in basic materials by 3.3 percentage points in terms of assets compared with the category average, and its energy allocation is similar to the category. The sectors with low exposure compared to category peers are real estate and technology, with real estate underweighting the average portfolio by 4.0 percentage points of assets and technology similar to the average. The strategy owns 2,316 securities and is diversified among those holdings. In its most recent portfolio, 3.0% of the strategy's assets were concentrated in the top 10 fund holdings, as opposed to the category average's 13.0%. And finally, in terms of portfolio turnover, on a year-over-year basis, 0% of the fund's holdings have turned over, whether through increasing, decreasing, or changing a position.

Average

Process

Avantis International Small Cp Eq ETF earns an Above Average People Pillar rating. Daniel C. Ong’s veteran status, with 19 years of listed portfolio management experience, brings a wealth of experience to the table. The strategies they currently manage have an average Morningstar Rating of 3.1 stars, demonstrating average risk-adjusted performance compared with category peers. Daniel C. Ong draws on a supporting cast of four additional listed managers. Together they average seven years of listed portfolio management experience. As a team, they manage 31 investment vehicles together, with a Bronze asset-weighted average Morningstar Medalist Rating, indicating the potential to deliver positive alpha in aggregate. The management team is invested in the fund, but the maximum investment by any manager is between $100,000 and $500,000. An investment of more than $1 million would be ideal to align managers' interests with those of the fund's investors. 

 Note: The People Pillar rating is indirectly assigned by an analyst. The longest-tenured manager of the fund also manages a different product rated by an analyst. Their analyst-assigned People Pillar rating is combined here with the People scores (algorithmic or analyst-assigned) for the fund’s other managers on a tenure-weighted basis.

Above Average

People

An evolution is taking hold at American Century, but some pluses and minuses continue, supporting a continued Parent rating of Average.
The firm entered the ETF market in 2019 by launching Avantis Investors, led by former executives from Dimensional, a strong firm that manages semi-passive strategies with value tilts and low fees. Avantis is now running roughly a dozen ETFs with similar features, while American Century’s in-house teams manage another 16 active ETFs. This effort is still fairly new and small as a percentage of assets under management, as most ETFs have been launched since 2019, but they help American Century compete with lower-cost passive and strategic-beta funds.
The bulk of the firm’s assets remain in U.S. mutual funds run by its internal boutiques. The U.S. value team has long been a standout, with tenured, stable management and good long-term results, but other investment teams haven’t produced consistently distinctive portfolios or performance, and some have continued to endure investment-professional turnover.
The firm’s ownership structure is noteworthy and supports a long-term strategy. While the firm has worked with a few large minority shareholders, including current 41% stakeholder Nomura, The Stowers Institute for Medical Research owns 45% of the firm but holds 70% of the equity voting rights. Employees own the rest, which should encourage retention.

Parent

Avantis International Small Cap Equity ETF

AVDS seeks long-term capital appreciation through an actively managed portfolio of small-cap stocks outside the US.

Avantis Emerging Markets Small Cap Equity ETF

Avantis US Small Cap Equity ETF

Large cap dominance was the highlight of the 2023 market rally, but small cap equities could pick up where their large cap counterparts left off for the remainder of 2024.

Small Cap Equities Offering Value Compared to Large Cap Peers

Avantis US Large Cap Equity ETF

Avantis US Mid Cap Equity ETF

Avantis US Mid Cap Value ETF

American Century Investments subsidiary Avantis Investors has listed three new active equity ETFs on the New York Stock Exchange. All three funds emphasize companies with smaller market caps and higher profitability and value characteristics.

Avantis Rolls Out 3 Active Equity ETFs

Avantis Investors launched the Avantis International Small Cap Equity ETF (NYSE Arca: AVDS) on the New York Stock Exchange today. The active fund invests in a diverse group of non-U.S. small-cap companies across market sectors, industry groups, and countries.

Avantis Launches New Active International Small-Cap ETF

KANSAS CITY, Mo. , July 20, 2023 /PRNewswire/ -- Avantis Investors ®, a $27 billion* investment offering from global asset manager American Century Investments®, launched a new exchange traded fund (ETF) today.

News for Avantis International Small Cap Equity ETF ETF (AVDS)