Small caps are looming over investors’ blueprints for 2025, and likely for good reason; rate cuts do appear poised to benefit small caps disproportionately. That said, not every small cap strategy is created equal. Some are standing out form the pack, rising into the upper echelons of ETFs overall. The Avantis U.S. Small Cap Value ETF (AVUV ) and its value approach to small caps have barnstormed the ETF market over the last calendar year.
Over the last month alone, AVUV has gathered more than half a billion in net inflows. Specifically, it has added $655.8 million in inflows over the last month, per ETF Database data. That data, as of December 9, also indicates more than $100 million in flows in just the last five days. According to YCharts data, the fund has almost “doubled” its AUM since the start of 2024. Entering the year around $9 billion, the fund now sits at just over $16 billion.
The fund’s small-cap ETF approach, leaning on value, may help explain those major inflows. Should one more rate cut arrive this month, as some investors expect, small caps would enter 2025 with real momentum. A value approach like AVUV’s could help managers identify those firms already undervalued by markets and, therefore, potentially poised for gains.
AVUV, which charges 25 basis points, hit its fifth anniversary this past September. The strategy curates its portfolio using fundamental criteria, assessing firms via metrics like cash flow, revenue, and price-to-book value. That has helped AVUV return 10.26% over the last three months, per Avantis Investors data. That beat the firm’s benchmark, the Russell 2000 Value Index, which has returned 8% over that time frame.
Taken together, AVUV’s significant inflow metrics mark a strong end to 2024. Looking ahead to 2025, it continues to make its case as a liquid, value-oriented option with positive sensitivity to further rate cuts.
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