Is value investing ready for its comeback? Years have gone by with frothy tech firms big and small leading the way. Value, by contrast, has not had its limelight moment. Quietly, however, one particular active value ETF has bucked the trend and performed quite well over a long time period. It could prove to be a worthwhile addition for many investors looking for different ideas outside of passive, growthy ETFs.
See more: Bull vs Bear: Is It Time for Value ETFs to Rotate Into Favor?
That strategy? The Avantis U.S. Small Cap Value ETF (NYSEARCA:AVUV), which charges just 25 basis points, stands out. The fund has more than doubled the performance of its ETF Database Category and FactSet Segment averages over the last three years. It has also outperformed across all available time frames for which it has data, per VettaFi’s ETF Database.
That owes in part to the active value ETF’s approach. AVUV invests in small-cap value stocks that meet fundamental screening standards. It looks for factors like cash flow, revenue, and expenses. In doing so, it pursues the benefits of indexing such as diversification and transparency, while also looking for outperformance thanks to its active approach.
That has helped it reach a new level of AUM, crossing over $10 billion. Given that many ETFs perform well, however, why does this particular active value ETF stand out?
The 2024 Case for Active Value ETF AVUV
Intriguingly, rate cuts could play a role. One imagines normally that rate cuts mostly boost heavy-borrowing, growthy tech firms. However, cheaper borrowing costs could help value firms with healthy balance sheets that have done well amid high rates, as well. The ETF has returned 27.8% over the last year of high rates. Taken together, the strategy may appeal to investors looking for some different equity strategies for their portfolios.
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