Avantis US Mid Cap Value ETF

AVMV

Market cap $264M

We've been marveling at the performance of U.S. large-cap stocks since that early April low. We've also been tracking whether small-caps are finally going to keep up pace with their larger counterparts.

Avantis U.S. Mid Cap Value ETF is an actively managed ETF targeting mid-cap U.S. stocks, aiming to outperform the Russell Mid-Cap Index with a low expense ratio of 0.20%. Despite recent market declines, AVMV has historically outperformed its benchmark and charges lower fees than competitors, making it a potential investment opportunity. The fund focuses on value and profitability metrics, with significant sector weights in consumer discretionary, financials, and energy, but less in technology and utilities.

Incepted in November 2023, AVMV is an actively managed ETF focused on underappreciated, high-quality mid-caps. In the current iteration, it has a financials-heavy portfolio with a 7.1% adjusted EY and rather large but not ideal quality exposure. Its performance amid market turmoil has been soft, with downside capture being especially worrisome. There is something to dislike about longer-term performance as well.

Could 2025 finally be the year for value ETF investing? Value funds, by some definition, are infrequent star players in market narratives.

Small caps are gathering significant attention right now, and for good reason. The category appears set to benefit from rate cuts filtering through the economy, easing borrowing costs for smaller firms.

Mid-cap Value stocks have underperformed recently but historically rank second in performance, suggesting potential for mean reversion and future gains. Avantis U.S. Mid Cap Value ETF offers exposure to mid-cap value stocks but is rated a Hold due to its limited history. AVMV's historical performance metrics look promising, though. The AVMV ETF has a diversified portfolio with significant exposure to Financials and Consumer Cyclicals, sectors closely tied to economic conditions.

Could midcaps be the right call for 2025? Smaller firms appear poised to benefit from rate cuts more than their larger peers.

Trying to add some more ETF exposure before the year is through? Now may be the time as the yield curve returned to normal earlier this week for the first time in more than two years.

Rate cuts are coming – the question is, when? Many market watchers are expecting at least one cut this Fall as the U.S. inflation rate has cooled.

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.