If 2025’s widespread market volatility has taught advisors anything, it’s that diversification is extremely important.
A well-diversified portfolio can offer a number of significant benefits to advisors, investors, and retail traders alike. First, diversification can broaden out one’s return opportunities, opening new angles to cultivating capital appreciation. Additionally, a diversified investment pool can help mitigate exposure to risks in individual markets or sectors.
For advisors looking to build a more diversified portfolio, there are plenty of ways to do so. Some folks have opted to move some of their assets into international stocks to broaden out beyond U.S. equities. Others have pivoted more towards small-caps to blunt risk from large-cap overconcentration.
International equities and small-caps each offer a unique avenue for creating a more diversified portfolio. One efficient way to take on both strategies at once is through the use of an international small-cap ETF. Through a single ticker, advisors can acquire more international exposure while broadening their portfolio weight across the cap spectrum.
That being said, both international equities and small-caps tend to carry a higher degree of portfolio risk. As such, a fund that invests in both sectors could benefit greatly from an actively managed portfolio team.
AVDV Offers an Active Approach
The Avantis International Small Cap Value ETF (AVDV ) offers an active take on an international small-cap strategy. With a focus on value, the fund looks for companies trading at attractive discounts with the potential for long-term growth. This strategy is made more approachable through active management, giving AVDV’s portfolio team more flexibility to explore small-cap opportunities across the globe.
As an international fund, AVDV can help advisors broaden out their equity exposure outside of the United States. The fund holds significant exposure towards Japanese companies, along with Canada, Australia, and the United Kingdom.
AVDV’s results are currently showcasing both the near-term and long-term benefits of an active international small-cap approach. As of May 31, 2025, the fund’s NAV has jumped over 19% year-to-date. Meanwhile, AVDV’s NAV has risen more than 6% over the last month alone, as of May 31, 2025. Both the near-term and long-term results of AVDV are steadily outpacing that of the fund’s benchmark index, the MSCI World ex USA Small Cap Index.
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