Navigating small caps can be difficult; It is not always easy to find pockets of growth potential in companies that are not industry giants. Through the use of active management, American Century Investments is able to offer the Avantis US Small Cap Value ETF (AVUV), who is looking for these areas of opportunity, and investors are taking note.
Engineered wood products are an area that is poised for growth in the future. ReportLinker released the Global Engineered Wood Products Market 2021-2025, a outlook and forecast for the space over the next four years, and found that a compound annual growth rate of 6% is expected.
The analysis predicts an overall increase in residential and commercial construction as well as greater use of engineered wood in construction as opposed to sawn lumber.
The report was an analysis of the industry globally and included a detailed overview of the market as a whole and within different categories, along with earnings and financial metrics for the major vendors in the space. One of these suppliers, Louisiana-Pacific Corporation, commonly referred to as LP, is a major supplier of engineered wood products to the United States.
LP reported net sales of $ 1.3 billion in its latest earnings call, a 142% increase that covered the period ending June 30.e, according to their website. For the first six months of the year, sales increased $ 1.2 billion from a year ago, to a total of $ 2.3 billion, reflecting a 107% increase.
AVUV captures the growth of small caps
American Century Investments, in partnership with Avantis Investments, offers the Avantis US Small Cap Value ETF (AVUV), an ETF that invests in small cap companies with a low valuation but high profitability ratios.
An actively managed ETF, AVUV combines the typical benefits of tracking an index – diversification, low turnover and transparency of exposures – with the flexibility to capture price movements as they occur, and advisers invest from more and more because of the methodology, according to American Century.
For benchmarking purposes, the fund uses the Russell 2000 Value Index, which tracks the 2,000 smaller-cap stocks of the larger Russell 3000 index, but the ETF does not track this index.
AVUV’s portfolio managers use fundamental filters such as outstanding stocks, cash flow, expense, income, and book value to select stocks. Small businesses with high profitability are more heavily weighted than those with lower returns and higher prices.
In addition, AVUV may also invest in derivative products, such as forward contracts, forward currency contracts and swap agreements to gain equity exposure and manage cash flow.
AVUV invests in Louisiana-Pacific Corporation: LPX is one of the top 10 holdings of the fund with a weighting of 0.74%.
At the end of September, some of the fund’s top sector allocations included Financials at 30%, Consumer Discretionary at 17% and Industrials at 17%.
AVUV has an expense ratio of 0.25%.
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