While many investors are familiar with the traditional three-year ETF milestone, fewer, perhaps, appreciate a fund’s fifth birthday. Yes, an ETF’s third anniversary brings some material benefits, with a fifth anniversary more symbolic, but it can still stand out to RIAs and brokers. The Avantis Emerging Markets Equity ETF (AVEM ), will hit five years of operation on Sept. 17, with its flows spiking as it reaches that milestone.
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AVEM charges a 33 basis point fee for its services. The strategy has not only added $300 million in net inflows over the last month. It has also picked up more than half a billion dollars in the last three months alone. Those inflows have pushed the emerging markets ETF AVEM into the top three in the EM equities category ranked by one-month flows. That has helped the emerging markets ETF reach more than $6 billion in AUM.
Emerging Markets ETF Investing
On top of those flows and its birthday, the strategy has returned 17.3% over one year on an average, annual basis. That has beaten the fund’s benchmark return of 15.2% in that same time frame, per Avantis Investors data.
So, what might be driving those flows as the fund hits its fifth birthday? The strategy actively invests in emerging markets, which sets it apart from the majority of emerging markets funds on its own. An active approach, leaning on manager experience and research, can get a better sense of each market’s particulars. What’s more, an active fund can adapt quickly in scenarios like the yen carry trade unwinding several weeks ago, which impacted other East Asian markets.
The emerging markets ETF emphasizes small-cap firms with strong profits and low valuations, underweighting large-cap firms. With its diversification away form the United States, it could offer a solid addition to a core set of allocations.
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