With the year drawing to a close, investors can take the opportunity to reflect on the ETF world and the trends that defined the year. The growth of active ETFs continued in 2022 as one of the major themes for the year, and despite the wild geopolitical, inflationary, and interest rate risks, several active equity ETFs stood out this year, including two from Avantis Investments, a brand from American Century.
Avantis has two strategies in the top five active equity ETFs for 2022 based on YTD fund flows, with the Avantis U.S. Small Cap Value ETF (AVUV) and the Avantis U.S. Equity ETF (AVUS) taking in $2.4 billion and $1.6 billion YTD, respectively. In a difficult year for equities, the two have stood out as well, with AVUV specifically being one of just three active ETFs to bring in more than $2 billion YTD, according to VettaFi.
AVUV may be able to credit these results to its value approach and its focus on small-caps, which may have been nimbler this year while bigger firms bore more of the pain from the Fed’s rate hikes and a tumultuous global energy market. The strategy charges 25 basis points and has outperformed its ETF Database category average and Factset segment average by 5.5% and 3.8% YTD, respectively.
AVUS also has a lean towards smaller, more value-focused stocks, though it can invest in equities of all capitalizations as well. The ETF charges less than AVUV at just 15 basis points, though it has not outperformed its categories as thoroughly, basically tied with its FactSet Segment Average on a YTD basis but outperforming the ETF Database average by 3.4%.
AVUV came in with the third-highest YTD fund flows as of writing, while AVUS is ranked fifth. The top active equity ETF is the JP Morgan Equity Premium Income ETF (JEPI), which has added almost $12 billion YTD, followed by the Dimensional U.S. Core Equity 2 ETF (DFAC), with the Dimensional International Core Equity Market ETF (DFAI) in fourth with $1.8 billion in YTD flows.
With AVUV not estimating cap gains as of last month, it’s also perhaps been a case study for the argument that the time of value investing may be back. For those investors looking to bolster their active equity ETFs, both AVUS and AVUV could be worth considering as some leading active offerings next year.
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