In a complicated quarter of 2023 so far, there have been a few investing styles and themes that have stood out as more durable than the others despite rising rates and bank crisis volatility. Foreign equities and value have each shown some positives, and it may not be too late to combine the two in an emerging markets value ETF like the Avantis Emerging Markets Value ETF (AVES), which is signaling a buy this week according to technical indicators.
Why emerging market equities? Well, this year presents them with an opportunity to rebound after the war in Ukraine, global monetary tightening, and ripples from China’s persistent zero-COVID closing made 2022 a tough one for those markets. 2023 presents a new opportunity, especially with China changing course and reigniting its hunger for the commodities that drive emerging markets’ performance.
Add in a value perspective that looks for those names, and you get an emerging markets value ETF like AVES. From American Century Investment’s Avantis Investors brand — which has had a strong last few months as active ETFs have started 2023 strong themselves — AVES is actively managed, investing in EM equities with lower prices relative to their book values.
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AVES charges 36 basis points and looks for high profitability and value firms, while also considering factors like liquidity, tax, and performance. The ETF determines its firms by also looking at firm financials and market data as well as cash flows and shares outstanding. AVES has returned 2% YTD according to YCharts, which has slightly outperformed its sibling EM ETF, the Avantis Emerging Markets ETF (AVEM).
AVES had risen above its 200-Day Simple Moving Average (SMA) midday Wednesday, with the ETF having experienced a golden crossover over the last several weeks in which its 50-Day SMA lifted above its 200-Day SMA. Having almost touched oversold territory this month according to its 14-Day Relative Strength Index (RSI), AVES could be poised for additional strength in the weeks ahead and may be worth keeping an eye on among other internationally-focused Avantis strategies.
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