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.
The first cut is the deepest — so they say. As with all complicated relationships, this mantra may certainly ring true for the Federal Reserve and the markets — at least from a psychological standpoint.
Upcoming interest rate cuts have small-cap ETFs primed to outperform.
The Federal Reserve is expected to make its first rate cut since 2020 later this month. The rate cut should make it easier for smaller companies to borrow and grow their bottom lines.
Rate cuts, after so much back and forth, appear imminent following Fed Chair Jay Powell's most recent comments at Jackson Hole. That many see many ETF investors on the hunt for the right strategy to benefit from the unwinding of the last two years' rate regime.
Because of how it's structured, the S&P 500 index is increasingly reliant on just a few companies for its performance. Economic indicators suggest some ETFs out there could outperform the S&P 500.
Friday's disappointing jobs report has put a huge damper on economic sentiment for the moment. Goldman Sachs has bumped up the odds of a recession from 10% to 25% over the next 12 months.