In the months and weeks before rate cuts hit, many investors had likely considered which securities would benefit most. One frequent area of discussion, smaller firms, carried some notable logic given that smaller firms struggle more with high costs of borrowing than their larger peers. With a hefty 50 basis point (bps) cut this week, one small cap value ETF has seen flows rise considerably.
See more: This Small-Cap ETF Could Ride Rate Cuts Into a Key Milestone
That fund, AVUV, has gathered half a billion over the last month per ETF Database data. The Avantis U.S. Small Cap Value ETF (AVUV ), saw its inflows spike this week, adding $139 million in that time. Intriguingly, that positions the fund just below $5 billion in total inflows in just one year, now sitting at $13.4 billion in total AUM.
Flows may not suggest momentum, alone, but the small cap value ETF’s tech chart also merits a look. Its price of $96.07 sits well above both its 50 and 200-day Simple Moving Averages (SMAs). What’s more, it has seen that price increase without signaling that it has been overbought. Its Relative Strength Index (RSI) sits at just 59.8 per YCharts, below the overbought threshold of 70 according to that metric.
The fund’s approach could help explain why it is standing out from other small cap ETFs investors may be watching for a rate cut bump. AVUV charges 25 bps for its approach. The strategy takes an active ETF approach, selecting small cap names per fundamental criteria. AVUV assesses factors like cash flow, revenue, and price-to-book value. It aims to produce some of the benefits of indexing, like diversification and transparency, while also leveraging its active approach to provide flexibility.
Though it may not keep up its pace of inflows, AVUV has stood out in the second half. Returning 20.2% over one year, beating its benchmark per Avantis Investors data, AVUV could be worth a closer look.
For more news, information, and analysis, visit the Core Strategies Channel.
