2022’s broad market sell-off hasn’t been easy for investors, to put it mildly. It’s not easy to enjoy the holiday season simultaneously looking back at such a bumpy 2022 and peering ahead at a very uncertain 2023, with a recession a distinct possibility. Active equity investing could be a welcome help for investors’ portfolios, with a cheap active equity ETF like the Avantis U.S. Equity ETF (AVUS) one to consider given its momentum ending this year.
The strategy from American Century’s Avantis Investors’ brand invests in all-cap U.S. stocks, with a slight bias toward smaller firms with high profitability or value traits. The ETF employs fundamental criteria in its analyses like shares outstanding, price to book to select holdings, as well as cash flow. AVUS underweights or may even exclude large-cap companies or those with low profitability, also.
It’s taken in a notable $1.7 billion in net inflows on a YTD basis, and with its 15 basis point fee, it’s the cheapest active equity ETF available in the top five ETFs ranked by YTD flows. Its flow momentum is keeping strong, too, taking in $650 million in net inflows over the last three months. Its performance largely matches those flows, outperforming both the ETF Database Category Average and Factset Segment Average by 1.4% and 0.64% respectively.
Compare its 15 basis point fee to the 35 basis point fee charged by a competitor, the JP Morgan Equity Premium Income ETF (JEPI), or even the 19 basis point fee charged by the Dimensional U.S. Core Equity 2 ETF (DFAC), and its momentum appeals yet more, especially with how uncertain the next year is. The SPDR S&P 500 ETF Trust (SPY) may charge just 9 basis points, but it’s also down -$3.7 billion in net outflows over just the last month.
Active managers could well outperform indexes next year, according to Bank of America, with valuation dispersion near historical highs. For investors looking for an entry into active equity investing for the new year and considering which product to start with, AVUS could be the cheap active equity ETF to choose given its low cost.
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