Emerging markets have been a tough nut to crack in recent years, with passive indices experiencing stagnation as US markets soar to new heights. The Avantis Emerging Markets Value ETF (NYSEARCA:AVES) emerges as a beacon of hope for those seeking active management in this turbulent landscape.
A Fresh Perspective on Active Management
AVES, launched in 2021, aims to achieve capital appreciation through a portfolio of value equities across emerging markets. With an expense ratio of 0.36%, the fund has shown promising results despite its relatively short track record.
Uncovering the Holdings
AVES focuses on stocks with lower valuations and higher profitability ratios, banking on the idea that the market often undervalues such gems. The fund boasts 1,600 holdings, offering a well-diversified approach with no individual position exceeding 1.09%.
Sector and Country Allocations
Tech takes the lead in sector allocation at 14.295%, closely followed by Consumer Discretionary, Materials, and Industrials. From a country perspective, China, India, and Taiwan share similar weightings, providing a balanced exposure across diverse emerging economies.
A Glimpse at Peer Comparison
Comparing AVES to the passive iShares MSCI Emerging Markets ETF (EEM) reveals AVES's outperformance, highlighting the efficacy of active management in navigating volatile markets.
Pros and Cons of AVES
While AVES offers a diversified exposure to undervalued companies in developing markets, geopolitical risks and regional concentration pose potential downsides. Investors must weigh these factors before diving into the fund.
In Conclusion
As emerging markets gear up for potential outperformance, AVES stands out as a compelling option for investors seeking value in uncertain times. With a strategic focus on profitability and diversification, AVES proves to be a promising avenue for capitalizing on the growth potential of emerging economies.