Investors are closing the books on another eventful year — marked by record highs for the major stock market indices, record action in Treasury yields and record assets and flows into ETFs. 2024 was also marked by a much-debated pivot from the Federal Reserve, a dramatic Republican sweep in Washington, and plenty of geopolitical turmoil.
Small caps are looming over investors' blueprints for 2025, and likely for good reason; rate cuts do appear poised to benefit small caps disproportionately. That said, not every small cap strategy is created equal.
New year on the mind? With the holiday season likely calming market news and narratives in a few weeks, now is the time to act for those refreshing portfolios.
Exchange-traded funds (ETF) continue revolutionizing how investors build their portfolios, offering cost-effective ways to access diverse market segments. While individual stocks might deliver higher returns, ETFs provide a balanced approach to wealth building through broad diversification.
Small-caps and value stocks have soared these past few days on improved sentiment. AVUV has been one of the biggest beneficiaries and is up 10% since the election. It has outperformed since inception, too. The fund's cheap valuation, trading at a 50%-70% discount to the S&P 500, provides potential for capital gains and enhanced shareholder returns through buybacks.
Avoid the most popular small-cap ETF and focus more on quality businesses with these two picks.
As part of the firm's ongoing celebration of its five-year anniversary, Avantis Investors leaders rang the closing bell at the NYSE this past week. The firm's ETFs crossed the $50 billion mark this year, a notable milestone for a brand with half a decade's worth of operation.
We explore why Avantis US Small Cap Value ETF, an actively managed small-cap value ETF, has been seeing tremendous traction relative to the iShares Russell 2000 Value ETF. We like AVUV's sector tilt, and its potential to benefit from various themes of mean reversion. Valuations look compelling as well. Technically, AVUV is seeing bullish conditions, trading above key moving averages on the daily chart and offering a fair risk-reward within a wedge pattern on the weekly chart.
AVUV is a top performing small-cap value fund with a 0.25% expense ratio and $13.81 billion in assets under management. Currently trading at 11.41x forward earnings and 5.62x trailing cash flow, AVUV offers excellent value and is sufficiently diversified with 700+ holdings across 114 unique GICS sub-industries. AVUV stands to benefit from declining interest rates. Its 17.65x interest coverage ratio is low, and its 2.28 weighted average current ratio ranks in the bottom third of its category.
The age of large-caps may be over; has the age of small-caps begun? It certainly feels that way when looking at inflows into a small-cap value ETF like AVUV.
In the months and weeks before rate cuts hit, many investors had likely considered which securities would benefit most. One frequent area of discussion, smaller firms, carried some notable logic given that smaller firms struggle more with high costs of borrowing than their larger peers.
The Federal Reserve cut interest rates by 0.50% today as it continues to aim for a soft-landing scenario. The interest rate cut is the first in the Fed's historic fight against inflation that's lasted over two years.