Avantis has 3 New UCITS ETFs for US, Europe and Pacific region. – Investment Moats

It is quite interesting to see their growth since the time I wrote about them.

This is the AUM growth in almost 1 year.

If investors have any reservations about their small AUM size, I think that have been kind of erased in a way. The growth of their Global Small Cap and Emerging Markets strategy have been nothing short of astounding.

The Global Small Cap Value is particularly unique in its positioning because before the listing of Dimensional’s Global Targeted Value, that is the only small cap value ETF out there. It makes it easier for a fund manager to add that slice to their portfolio than replace the Global Equity slice with Dimensional.

Past 1 Year of Avantis Fund’s Performance have been Decent

I don’t want to delve into this too much because a good systematic fund can do poorly against their benchmark index in the very short term. And they can do very well.

I can point out that the 33% international proportion of their Global Small Cap Value doing 52% in 2025 to accentuate itself but likely investors of the fund cannot see it in the funds poorer than Global Large Cap Equity performance because US proportion of the fund sucks in 2025. Yet at the start of the year, this proportion did much better than Global Large Cap equity.

You can refer to my monthly portfolio updates of Daedalus Income portfolio to review the performance.

Systematic Active Funds like Avantis’ Funds Help you Passively Execute a Strategy that Aligns to Your Investment Philosophy

Systematic-active funds is not for everyone.

If you have an investment philosophy of just trust the market, however is the performance, be broadly diversified, be low-cost, have the humility to admit you don’t know how the future will be or how the market is, then perhaps buying traditional index tracking ETFs or unit trust that tracks the MSCI World, Emerging Markets or the US will be more for you.

If you are like me, prefer to consistently own cheaper companies that are more profitable, perhaps with better momentum profile, that have history of market evidence that shows better than market performance, then perhaps you can consider this funds.

The most simple way I explain to you is:

1. In a universe of securities, be it developed world, developed small cap only, emerging markets, Latin Amercia
2. From this universe, I want to constantly rank the companies based on certain metrics, such as cheapest to most expensive, or highest momentum to the lowest, or highest adjusted operating cash flow to lowest, or other metrics that based on research have shown you can earn a higher expected return if you buy-and-hold-and-constantly-reconstitute over the long term.
3. The strategy either overweighs those that ranked high or picks the top x number of securities, after considering some portfolio allocation constrains such as not too overweight sectors or regions.
4. The ETF helps you periodically do this either quarterly or half-yearly or yearly. In Avantis’ case, they do this reconstitution on a more frequent basis.

In Avantis’ case, you can imagine we profile the universe of stocks in different buckets based on their adjusted equity value, and their adjusted aggregate cash flow relative to their book value:

And we want to focus on owning more of the securities that have high aggregate cash flow, which usually trade at a fair equity value, and the securities that have a high equity value regardless of their aggregate cash flow, but at least they have positive cash flow.

This might sound cheem to you but deep down, I know most of you want to consistently own:

1. Very cheap companies but at least they are profitable but inconsistently profitable. If they revert to a higher fair value, you make money.
2. You also don’t like to own stuff that is expensive.
3. Very profitable companies, which you acknowledge usually is not cheap, and you just want to pay fair value for them.

If this is more to your philosophy, then strategies like Avantis can help you execute it.

I think this is something for you to think about, because if you don’t know why these are significant (like why the fxxk do you not want to own expensive stuff that very big in market cap and are so well known), then you would struggle to hold on to the ETF when they don’t do well.

The 3 New Avantis UCITS ETFs

Okay! We wasted enough time but here are the ETFs:

The ETFs are listed in London and Germany. You can either get the USD denominated, EUR denominated or the GBP denominated one.

And you can buy them through a low cost, trusted broker like Interactive Brokers.

One thing you will notice about all of Avantis UCITS ETFs, aside from Global Small Cap value is that they are benchmarked against a region IMI index.

IMI stands for Investible market index, which sought to measure the performance of large, mid and small-capitalization segments. By this, it tells you Avantis’ investment universe for each fund covers not just the usually mid and large cap but also the small cap. (Avantis Global Equity is benchmarked against World IMI and Emerging Markets is benchmarked against Emerging Markets IMI)

The Russell 3000 covers the largest and smallest companies in the US.

Since they are systematic-active most likely they are going to overweight the stocks that are a cross between value and operating profitability.

Based on what my adviser Isaac and I observe, you are likely going to get a basket of securities that are cheaper than the benchmark index, but in terms of expected returns [which is a future not historical return estimation], you are not going to be too far off.

You can Really Fine Tuned Your Investment Allocation Closer to Your Philosophy with these New Avantis UCITS Edition

Now I really like these addition because every Tom, Dick and Harry tells me they have their own believe:

1. I only want US
2. I don’t want a shxt place like Europe
3. I don’t believe in Emerging Markets
4. I want more of Japan!

And these additional may help you express that.

If you just want to keep it simple but stay in developed markets then it can be:

1. 100% in Avantis Global Equity

If you want to cover developed and emerging markets:

1. 90% in Avantis Global Equity
2. 10% in Avantis Emerging Market Equity

If you read the madness of small cap value over the past 90 years and have an affinity towards it and wish to boost the portfolio you can:

1. 80% in Avantis Global Equity
2. 10% in Avantis Emerging Markets Equity
3. 10% in Avantis Global Small Cap Value

If you don’t want to be so concentrated in the US:

1. 50% in Avantis America Equity
2. 25% in Avantis Europe Equity
3. 15% in Avantis Pacific Equity
4. 10% in Avantis Emerging Markets Equity

The only question is… what is your investment philosophy.

This is how MSCI Europe IMI looks like currently:

Very financials, industrials and healthcare dominant. Didn’t realize UK was so big.

Here is how MSCI Pacific IMI looks like currently:

Very financials, industrials and consumer discretionary dominant. It is 68% Japan! 20% is in Australia.

This should give you all some ideas.

Epilogue

I won’t personally use these new Avantis ETFs but if I would like to buy more of some areas in the next 30 years if they were too depress or exhibit momentum, I feel comfortable with Avantis and this would be a way to express them.

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Kyith is the Owner and Sole Writer behind Investment Moats. Readers tune in to Investment Moats to learn and build stronger, firmer wealth foundations, how to have a Passive investment strategy, know more about investing in REITs and the nuts and bolts of Active Investing.

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Kyith worked as an IT operations engineer from 2004 to 2019. Currently, he works as a Senior Solutions Specialist in Fee-only Wealth Advisory Firm Providend. All opinions on Investment Moats are his own and does not represent the views of Providend.

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