Where will tariffs go next? It’s hard to say, given how much back and forth there has been. The “will they, won’t they” nature of tariffs aside, domestic U.S. equities face a variety of challenges that may point to adding some needed diversification. One way to do that could be via an active ETF with an emerging markets focus. AVEM, for example, could provide a strong option for investors looking to diversify away from the U.S.
See more: American Century Leaders Talk Changing Active ETF Landscape
The Avantis Emerging Markets Equity ETF (AVEM ) launched in 2019. Charging a 33 basis point fee, AVEM actively invests with an aim of outperforming MSCI Emerging Market IMI Index. The emerging markets ETF targets firms of all market caps, but it does lean into small-caps. The ETF underweights large-caps that have lower profitability and higher price-to-book values. Digging in deeper, AVEM leans on metrics like book value, cash flow, accruals, and more in assessing firms’ potential for investment.
The fund has taken that approach and outperformed its benchmark over the last five years, per American Century Investments data. Specifically, AVEM has returned 11.66% over the last five years as of March 31. Meanwhile, the MSCI Emerging Markets IMI Index returned 8.77% in that time.
What’s more, AVEM has added more than a quarter billion in net inflows over the last month, per ETF Database data. That comes despite those significant tariff impacts that have seen some near record selloff days.
What about the active emerging markets ETF sets it apart, then? The strategy’s emphases on fundamental analysis could help it continue to perform well even amid turbulence. Its active adaptability can help it scrutinize foreign small-caps more closely than a passive fund might, perhaps. Taken together, the strategy could provide a compelling option.
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