AVGV ETF Review – Avantis All Equity Markets Value ETF


AVGV is a new ETF from Avantis that is a single fund solution for the global stock market investor who wants to go all in on Value stocks. It’s not trading yet, but let’s review the info we’ve got so far.

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If you’ve arrived here, I’d guess you already know Avantis is one of the best names in the biz for factor funds, that Value has the most robust statistical evidence of all equity risk factor premia, and that global diversification in stocks is probably a prudent idea. In March 2023, Avantis filed for a new fund for global value stocks, for which the proposed ticker is AVGV.

Previously, the global investor who wanted to only buy Value stocks had to use multiple ETFs. Simplicity in portfolios can be extremely valuable, both for advisors and retail investors themselves. Avantis will now soon offer a single packaged solution to go “all in” on Value globally.

AVGV will be the second “fund of funds” from Avantis after AVGE. While AVGE is global stocks with light factor tilts, think of AVGV as basically half of AVGE, holding only Value stocks – no blend or growth here. As such, this is probably only suitable for the “die-hard” factor investor. Still not quite as die-hard as Swedroe though, who goes all in on small cap value; we’ve still got large cap value here. AVGV introduces much more potential for tracking error regret compared to AVGE.

AVGV has an explicitly stated home country bias for the U.S., but it’s less than AVGE’s 70%. Target weights for AVGV for U.S., ex-US Developed Markets, and Emerging Markets of 60%, 30%, and 10% respectively. These also have acceptable ranges of basically 10% on either side of the target. Specifically, here’s what the breakdown of the 6 constituent funds looks like:

  • U.S. Value Stocks – 60% target; acceptable range of 50-70%
    • AVLV – Avantis U.S. Large Cap Value ETF
    • AVUV – Avantis U.S. Small Cap Value ETF
  • Ex-US Developed Markets Value Stocks – 30% target; acceptable range of 20-40%
    • AVIV – Avantis International Large Cap Value ETF
    • AVDV – Avantis International Small Cap Value ETF
  • Emerging Markets Value Stocks – 10% target; acceptable range of 5-20%.
    • AVES – Avantis Emerging Markets Value ETF

As with AVGE, managers appear to have some freedom to allocate within target ranges. The registration filing states:

The portfolio managers regularly review the fund’s allocations to determine whether rebalancing is appropriate. To better balance risks in changing market environments and control costs and tax realizations, the portfolio managers may allocate within the target range in light of prevailing market conditions and relative performance. We reserve the right to modify the target ranges and underlying funds from time to time should circumstances warrant a change.

The main thing that jumps out to me here is the fact that it’s not stated anywhere what the allocation ratio will be for large caps to small caps. In my opinion, AVGV’s desirability hinges heavily on where that rests. It may just be market cap weights, in which case small cap value exposure would be pretty small, which is likely an undesirable characteristic for the dedicated factor investor for whom this fund is most appropriate. I guess we’ll have to wait and see where that lands when the fund launches.

I made the point about AVGE that it overweights large caps, presumably to be close to market cap weights, but I’d rather see more weight to small cap value. Here too with AVGV, small cap value fans may still need to hold on to their AVUV and AVDV positions separately to purposely overweight them. But then if you do that, you’re still using 3 funds while AVGV only holds 5 funds, so have you really accomplished anything? Admittedly, this is all speculation. We’ll see how it shakes out.

Because it’s just a fund of funds, American AVGV investors will get pass-through foreign tax credits on its 3 underlying international funds. But AVGV is probably not great for a taxable environment.

After a fee waiver of 0.02%, AVGV will have a net expense ratio of 0.26%.

What do you think of AVGV? Do you prefer it over AVGE? Let me know in the comments.

Disclosures: I am long AVUV and AVDV.

Disclaimer:  While I love diving into investing-related data and playing around with backtests, this is not financial advice, investing advice, or tax advice. The information on this website is for informational, educational, and entertainment purposes only. Investment products discussed (ETFs, mutual funds, etc.) are for illustrative purposes only. It is not a recommendation to buy, sell, or otherwise transact in any of the products mentioned. I always attempt to ensure the accuracy of information presented but that accuracy cannot be guaranteed. Do your own due diligence. All investing involves risk, including the risk of losing the money you invest. Past performance does not guarantee future results. Opinions are my own and do not represent those of other parties mentioned. Read my lengthier disclaimer here.


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