Active Management, Quality, and Value: The AVUS Trifecta March 2, 2021
Cyclical value stocks are on the mend, but quality should be a priority when investors hunt for value. The actively managed
AVUS “pursues the benefits associated with indexing (diversification, low turnover, transparency of exposures), but with the ability to add value by making investment decisions using the information in current prices,” according to Avantis Investors. The fund features an “efficient portfolio management and trading process that is designed to enhance returns while seeking to reduce unnecessary risks and costs for investors.”
AVUS is rooted in an academically-supported, market-tested framework aiming to identify securities with expected high returns based on market prices and other company information. Relying on trading and portfolio management processes, the Avantis team analyzes whether the perceived benefits of a trade overcome its associated costs and risk.
By Natalia Gurushina, Chief Economist, Emerging Markets Fixed Income Strategy
China’s activity gauges slowed further in February, but this weakness is likely to be temporary. Activity gauges across EM showed a lot of divergence.
China’s activity gauges undershot expectations in February (see chart below),
but there are good reasons to believe that
the weakness is temporary. First, China’s manufacturing typically moderates during the Lunar New Year due to factory closures. But this year’s celebrations also coincided with the new COVID restrictions, exacerbating the seasonal pattern. Second, many high-frequency indicators (including energy production by six major power stations) already show improvements compared to January. Third, production and business expectations held on extremely well despite the second wave of the movement restrictions. Finally, the global trade is rebounding – as witnessed for example by increasing container supply from China – which is a
March 2, 2021
The recent spike in yields and growing inflation concerns have weighed on equity markets. This new environment could be ripe for value and small cap ETFs.
Gargi Chaudhuri, Head of US iShares Markets & Investments Strategy, argued that the recent developments are a result of a new normalization.
“Within equities, we expect that ETFs tilted towards value and cyclicals will continue to benefit as rates move higher and the yield curve steepens – with over $8bn of ETF inflows to the value factor corroborating this view,” Chaudhuri said in note, remarking on asset flows so far in 2021.
“The reopening in the second half of the year will continue to fuel the reflation theme, but nominal interest rates are not expected to return to pre-pandemic levels,” Chaudhuri added.
Invesco has launched a new thematic equity ETF in Europe providing exposure to companies that are driving innovation in clean energy technologies.
Gary Buxton, Head of EMEA ETFs at Invesco.
The
London Stock Exchange in US dollars (
GCLE LN) and pound sterling (
GCLX LN) and comes with an expense ratio of 0.60%.
The fund is linked to the
WilderHill New Energy Global Innovation Index from California-based
WilderHill, a specialist provider of sustainable indices related to the clean energy and clean ocean investment themes.
WilderHill is known for developing some of the first benchmarks in the alternative energy segment. Its flagship index, the North America-focused