Avantis All Equity Markets ETF Fund Review | AVGE ETF Review

A few months ago when I wrote the article “ETF Wishlist for DIY Investors” (as a collaboration with friends from #FinTwit) one of the most repeated suggestions was for a fund that offered global core equity and factor tilts (especially value) in one neat package.

Basically, an all-in-one global fund that offered the best of both worlds – core equity and factor exposure.

Being able to fulfill “all of your equity desires” in one fund has remained elusive for most sophisticated DIY investors and savvy advisors who have had to cobble together several funds in order to tick-off all of the boxes.

For instance, imagining a scenario where you wanted a global market-cap weighted strategy plus value funds to represent all of the major markets including US, International and Emerging.

You’d likely be looking at solutions such as VT ETF (Vanguard Total World Stock Index Fund ETF) for your market-cap weighted exposure and then three separate value funds (US/Int-Dev/EM) to round out your factor focused mandate.

Jeez Louise, wouldn’t it sure be nice to have one fund that could do all of that?

Enter the room Avantis All Equity Markets ETF (ticker: AVGE).

Freshly minted AVGE ETF is the first global fund that I’m aware of that attempts to bring everything together under one hood that balances the demands for both “core equity” and “multi-factor” mandates as a total package solution.

As a fund of funds it manages to squeeze 10 of its equity ETF ingredients into a super-sandwich.

Why a Super Fund of Funds?

Why do all of this?

The folks over at Avantis give four distinct reasons:

  1. “This strategy is designed to provide exposure to a broadly diversified set of companies, sectors and countries while emphasizing securities with higher expected returns. The strategy pursues its objective through investing in a series of other Avantis exchange-traded funds (ETFs).”
  2. “It pursues the benefits associated with indexing (diversification, low turnover, transparency of exposures) but with the ability to add value by making investment decisions using information in current prices.”
  3. “Efficient portfolio management and trading process that are designed to enhance returns while seeking to reduce unnecessary risks and transaction costs.”
  4. “This strategy is built to provide an investor with an effective total-market equity allocation.”

What immediately comes to mind is that if you can solve all of your equity needs with one fund it allows you to focus more on the “other sleeves” of your portfolio such as fixed income and alternatives.

However, there are at least three potential problems that could arise from an all in-one fund that tries to do it all.

  1. Does it have strong enough factor tilts (especially towards value) to satisfy staunch value investing enthusiasts?
  2. Does it provide enough “core exposure” for those leaning more towards indexing solutions?
  3. Does it satisfy the global asset allocation of US, International Developed and Emerging Markets in a manner that is palatable for most investors?

We’ll do our best to examine and unpack these concerns in this ETF review.

Avantis All Equity Markets ETF AVGE Review with old world map
source: geralt on pixabay

AVGE ETF Review | Avantis All Equity Markets ETF Fund Review

Hey guys! Here is the part where I mention I’m a travel content creator! This investing opinion blog post ETF Fund Review is entirely for entertainment purposes only. There could be considerable errors in the data I gathered. This is not financial advice. Do your own due diligence and research. Consult with a financial advisor. 


source: New York Stock Exchange YouTube

Avantis ETFs: The Top Value Funds For Investors?

In little over 3 years Avantis Investors has managed to jockey for a position as one of (if not the best) value investing firms for DIY investors.

From an entirely subjective experience on social media I’m hard-pressed to think of “value ETFs” that are more recommended than the likes of AVUV (Avantis U.S. Small Cap Value ETF), AVDV (Avantis International Small Cap Value ETF) and AVES (Avantis Emerging Markets Value ETF).

Objectively, this reality is confirmed by several of those funds amassing Billions of dollars in AUM.

AVUV ETF = 3.2 Billion
AVDV ETF = 2.0 Billion

Thus, the table has been set for a newly minted fund such as AVGE ETF to succeed.

However, investors historically have oddly been less keen to adopt “global” products.

This baffles my mind.

AVGE ETF Overview, Holdings and Info

As mentioned previously, AVGE ETF is a super fund of funds in the sense that it packs 10 underlying ETFs in its suitcase.

Hence, it’s a 10-1 fund.

Let’s pop the hood to examine all of the goodies we’ve got inside.

AVGE ETF Underlying Holdings 10 in 1 Fund
source: avantisinvestors.com

AVGE Exposures Sorted By Geography

COMPANYTICKERCUSIPISINSECTORMARKET VALUE ($)WEIGHT
Avantis Emerging Markets Equity ETFAVEM025072604US0250726041Diversified2,377,287.225.67%
Avantis Emerging Markets Value ETFAVES025072372US0250723725Diversified1,598,858.643.81%
Avantis International Equity ETFAVDE025072703US0250727031Diversified4,265,279.2010.17%
Avantis International Large Cap Value ETFAVIV025072364US0250723642Diversified2,165,792.205.16%
Avantis International Small Cap Value ETFAVDV025072802US0250728021Diversified857,055.042.04%
Avantis Real Estate ETFAVRE025072356US0250723568Real Estate1,195,288.922.85%
Avantis U.S. Small Cap Value ETFAVUV025072877US0250728773Diversified2,190,733.385.22%
Avantis US Equity ETFAVUS025072885US0250728856Diversified18,718,224.0044.61%
Avantis US Large Cap Value ETFAVLV025072349US0250723493Diversified6,492,731.7015.47%
Avantis US Small Cap Equity ETFAVSC025072323US0250723238Diversified2,120,141.405.05%

Directly from the AVGE ETF Prospectus we’re able to notice the following: “target weight” vs “target range”

AVGE Target Weight

US Equity = 70%
International Developed = 17%
Emerging Markets = 10%
Sector Equity = 3%

AVGE Target Range

US Equity = 63 to 77%
International Developed = 10-24%
Emerging Markets = 3-17%
Sector Equity = 1-6% 

Now here is where we cannot please all investors.

Some will seek “greater exposure” to International Developed and Emerging Markets!

They’d likely prefer a 50/35/15 split between US, International and Emerging Markets.

On the other hand, you’ll find those investors that don’t feel the “slight home country bias” is enough!

They’d prefer 80/15/5.

And then you’ll find those who are “super contrarian” and want all three markers split evenly.

33/33/33 or 40/30/30.

This is clearly where going “global” will not tickle the subjective fancy of all.

And this is the primary reason why many investors prefer splitting up US, International and Emerging markets exposure into separate funds in order to allocate to personal taste.

I’m of the opinion the allocations (especially the target range) are acceptable but I’d be leaning more towards greater exposure to Int-Dev and EM versus US markets.

It’s by no means a deal-breaker though.

AVGE Info

Ticker: AVGE
Net Expense Ratio: 0.23
Distributions: Semi-Annual
AUM: 37.9 Million
Inception: 09/27/2022

Considering the fund is less than 2 months old, I’m impressed by the AUM it has been able to accumulate.

Although it’s not over the threshold of 50 Million (that seems to keep a fund safe from the executioner) it is well on its way.

The management fee of an all-in-cost of 0.23 is very reasonable in my opinion for a 10-1 fund.

Militant low-cost indexers will likely disagree but those who aren’t trying to shave the cat to the bone are probably “just fine” with it.

AVGE ETF – Sector Exposure

AVGE ETF Sector Exposure vs Category Average
source: morningstar.com

What’s immediately apparent about Avantis All Equity Markets Equity ETF is that it spreads out nicely from a sector exposure perspective.

I love that no sector reaches 20%!

You’ll notice AVGE ETF is overweight energy, industrials, real estate, basic materials and financial services.

On the other hand, it’s underweight healthcare, technology, consumer defensive and communication services.

Overall, I’m impressed with the sector exposure the fund offers with across the board coverage to everything.

AVGE ETF – Style Measures

AVGE ETF Value and Growth Measures including P/E, P/B, P/S, Dividend Yield, Historical Earnings, Cash-Flow Growth
source: morningstar.com

Here is where AVGE shines relative to typical Market-Cap Weighted indexes from the perspective of value and growth measures.

It has a huge advantage in Price/Earnings with 10.51 versus the Category Average of 17.21.

It offers across the board more attractive measures for P/B, P/S and P/Cash Flow (where lower is better) and Dividend Yield (where higher is better).

Noteworthy, is the funds relatively impressive Cash-Flow Growth % where it reigns supreme versus typical market-cap weighted index.

Overall, AVGE ETF looks mighty impressive across the board for a core meets factor fund.

AVGE ETF – Stock Style

AVGE ETF Stock Style Weight for Small, Medium and Large versus Value, Blend and Growth
source: morningstar.com

An immediate feather in the cap of AVGE ETF is that it offers considerably more small-cap and mid-cap exposure than typical market-cap weighted products that tend to be top heavy.

Overall, it tilts towards value with 49% versus 19% allocated to growth.

Its spreads out nicely with 21% small-cap, 26% mid-cap and 54% large-cap.

As with geographical allocations, AVGE ETF isn’t going to please all investors with its stock style configurations.

For instance, small-cap investors likely won’t bite.

However, I think the fund strikes a nice balance by covering all of its bases.

AVGE ETF – Factor Profile

AVGE Factor Profile Value, Momentum, Yield, Quality and Size
source: morningstar.com

AVGE offers solid across the board multi-factor exposure to value, size, momentum and yield versus category averages.

Often the biggest criticism of “vanilla market cap weighted funds” is that they don’t offer any significant factor exposure.

Yet Avantis All Equity Markets ETF is able to buck the trend.

AVGE ETF Alpha Architect Screening

Finally let’s consult the invaluable Alpha Architect Fund Screener for a comparison of AVGE ETF vs VT ETF.

AVGE ETF Alpha Architect Fund Screener Results
source: alphaarchitect.com
VT ETF Alpha Architect Fund Screener Results
source: alphaarchitect.com

EBIT/TEV: 9.93% vs 6.10%
Earnings/Price: 8.42% vs 5.60%
Momentum (2-12): -8.96% vs -16.94%
Returns on Assets: 9.63% vs 8.80%

It’s an impressive win across the board for AVGE ETF versus VT ETF.

Avantis All Equity Markets ETF Performance

Avantis All Equity Markets ETF performance versus VT ETF
source: portfoliovisualizer.com

This fund was just released so its performance has to be taken with a grain of salt.

However, it has offered investors more than 200+ basis points of higher returns relative to VT since its inception.

I’ll update the article at a future date to better reflect its performance over time.

Thumbs and Down for AVGE ETF
source: pixabay

AVGE ETF Pros and Cons

Let’s examine the pros and cons of Avantis All Equity Markets ETF.

AVGE Pros

  1. 10 in 1 fund providing a truly global equity solution for investors seeking a core fund with multi-factor tilts (especially value)
  2. The possibility for this fund to be a one fund solution for your equity exposure allowing you to focus upon other areas of your portfolio
  3. Significant mid-cap and small-cap exposure versus other “vanilla” market-cap weighted products
  4. Exposure to International and Emerging Markets to avoid “home country bias”
  5. Very reasonable net expense ratio of 0.23
  6. Potentially tax-efficient for US based investors (I’m Canadian so this is not an area of expertise)
  7. Adaptability to shift exposures geographically (could be considered a con by some)

AVGE Cons

  1. Maybe not enough “global diversification” to satisfy certain investors that want 50-60% or less US equity exposure
  2. Potentially “too watered down” by its core equity allocations and not enough small-cap exposure to appease value investors

What Others Have To Say

Prior to completing this article I asked friends on Twitter to express their thoughts on Avantis All Equity Markets ETF with some great responses.

“I like the expense ratio, global diversification, tax efficiency, simplicity, and factor tilts. I like a little deeper tilts myself, but can’t complain!” – @MarkTMeredith

“Well said. It is an amazing fund and in my view, the best one-fund solution out there. Rumor is that the fund-of-funds structure gives US investors the benefit of foreign tax credits, something that even the competition in $VT doesn’t do.” – @HML_Compounder

“Love: The cost:benefit as @MarkTMeredith discussed already. The systematic, quantitative approach Dislike: The lack of clarification regarding the shifting weights (as far as I know this hasn’t been clarified). Emerging Markets exposure for at-best similar returns to S&P.”
@DominantPort

“Waiting for UCITS version of the fund 🙏” – @MaciejWasek

AVGE Potential Portfolio Solutions

Now that we’ve taken a thorough look at AVGE let’s see how it can potentially fit into a portfolio at large.

100% ALL Equity Portfolio

Are you an all-equity investor?

Seeking a one-click solution for you portfolio?

Boom!

AVGE ETF and out.

100% AVGE.

Diversified Quant Portfolio

Here is a portfolio idea for the diversified quant:

60% AVGE ETF
20% KMLM ETF
10% LBAY ETF
10% TYA ETF

Here you’ve got your global equity solution covered with AVGE and you’ve introduced efficient treasury coverage with TYA (3X exposure) allowing you to also add trend-following managed futures (KMLM ETF) and a long-short equity strategy (LBAY ETF) to your portfolio.

Market-Cap Weighted Portfolio

If you’re committed to a market-cap weighted portfolio but want to dip your toes into the factor pond you might consider this allocation:

40% VT
20% AVGE
40% AGG

You’ve still got your 60/40 Portfolio with a small slice of factor exposure.

Nomadic Samuel visiting Port Hardy with his wife Audrey and father-in-law on Vancouver Island, British Columbia, Canada
Nomadic Samuel visiting Port Hardy with his wife Audrey and father-in-law on Vancouver Island, British Columbia, Canada

Nomadic Samuel Final Thoughts

There is a lot to love about Avantis All Equity Markets ETF!

Its one of the first ETFs to take a crack at being a truly global fund that blends core and factor (value) strategies together while offering significant small-cap and mid-cap exposure.

Yet, does it have enough “global exposure” to lure investors committed to avoiding home country bias?

Are the value tilts enough to lure in hardcore value investors?

Only time will tell.

But I do applaud Avantis for taking a stab at this kind of product as there definitely appears to be enough of a demand for it.

Overall, I’m impressed.

Now over to you.

What do you think of Avantis All Equity Markets ETF?

Is it on your radar?

Please let me know in the comments below.

More from Nomadic Samuel
Newfound Risk Managed US Growth | NFDIX Mutual Fund Review
Multi-strategy expanded canvas portfolio solutions are the primary bread and butter focus...
Read More
Join the Conversation

9 Comments

  1. says: Brian

    No thanks, but so appreciate the review. I already have plenty VT that I will never move from. My SCV is a 33% AVUV/AVDV/AVES. What I really want is a single global SCV only fund but that doesn’t exist…

Leave a comment
Leave a comment

Your email address will not be published. Required fields are marked *