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Avantis Fund: Small Stocks, Big Potential
1 Dec
Summary
- Avantis U.S. Small Cap Value ETF outperformed peers by a wide margin.
- The fund identifies attractively valued small stocks with high profitability.
- Active management helps uncover hidden investment opportunities in smaller equities.
Small-cap equities, once a source of substantial gains, have seen tepid performances recently, with indexes like the Russell 2000 and S&P SmallCap 600 yielding modest returns over the past five years. This trend has also affected small-cap value funds as investors gravitated towards megacap-growth stocks.
However, the Avantis U.S. Small Cap Value ETF (AVUV) has emerged as a standout performer in this challenging environment. With nearly $19 billion in assets, this actively managed fund has significantly outperformed its peers. Its investment philosophy emphasizes identifying attractively valued smaller companies with higher profitability ratios, a method that helps mitigate the risk of value traps and differentiates it from broader market indexes.
The active management of AVUV is a significant advantage, particularly as smaller stocks receive less analyst coverage. This allows the fund's management team to discover undervalued companies that might be overlooked by others, positioning it for continued success. The fund's ability to deliver strong returns, even amidst a strong AI trade and demand for quality stocks, highlights its robust strategy.
