Many investors are considering diversifying away from the U.S. While the domestic stock market remains strong, it is also quite expensive. What’s more, concentration risk as the U.S. stock market relies on just a handful of firms puts portfolios and the broader stock market at risk. For investors who are looking abroad, foreign equities factor ETFs can provide a slate of diverse options.
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Avantis Investors has a roster of foreign equities factor ETFs with varying approaches to international equities. Factor strategies can provide a helpful heuristic to approach a large pool of equities. What’s more, specific approaches like a value screen can help compare firms across different economies and market environments.
Active Foreign Equities Factor ETFs
Avantis International Small Cap Value ETF (AVDV)
AVDV combines a small cap and value approach to its international equities holdings. The strategy charges a 36 basis point (bps) fee. In doing so, it has gathered the third-highest flows on a YTD basis, per ETF Database, at $688 million. It has also returned 9.4% in that time, per Avantis Investors data, beatings its benchmark return of 4%. AVDV actively invests in small-cap value firms outside the U.S. based on attributes like expenses, cash flow, and price-to-book value.
Avantis International Large Cap Value ETF (AVIV)
Next among the foreign equities factor ETFs, AVIV charges 25 bps. It will hit its three-year ETF milestone in September, actively investing in the large-cap side of value first. AVIV looks for high profitability based on companies’ financials and market data. It has returned 7.6% YTD compared to 7% for its benchmark.
Avantis U.S. Mid Cap Value ETF (AVMV)
AVMV combines midcap and value factors, and is the most recently launched of the three strategies. The ETF charges a 20 bps fee for its active approach, looking for stocks between small and large sizes. It also uses fundamental screens, weighting individual firms based on those factors. AVMV has returned 10% YTD compared to just 6.2% for its benchmark in that time, per Avantis Investors data.
Each of the three foreign equities factor ETFs offers a slightly different cap size view into international firms. For investors looking to diversify, the trio of AVMV, AVIV, and AVDV could appeal.
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