AVGV targets deeply undervalued stocks across global markets, including emerging markets, using a systematic approach that goes beyond simple price ratios. The fund aims to capture the value premium more aggressively than traditional value indices by incorporating profitability metrics alongside valuation measures.
How It Works
The fund employs Avantis's proprietary value methodology, which combines traditional value metrics like price-to-book with profitability screens to avoid value traps. It allocates across developed and emerging markets based on relative valuations, typically overweighting regions where value opportunities are most pronounced. The portfolio rebalances quarterly but trades opportunistically when stocks hit specific valuation triggers, allowing for more dynamic exposure than index-based competitors.
Key Features
- Includes emerging markets value stocks, capturing a broader opportunity set than developed-only funds
- Profitability overlay helps avoid chronically cheap companies that destroy shareholder value
- Active implementation within systematic framework allows trading around corporate actions and market dislocations
Risks
- Value stocks can underperform growth for extended periods — the 2010s saw a decade-long drought
- Emerging market exposure adds currency risk and potential for 20-30% drawdowns during crises
- Concentrated bets on out-of-favor sectors like energy or financials can amplify volatility by 1.5-2x versus broad market
Who Should Own This
Best suited for patient investors with 7+ year horizons who believe mean reversion will eventually reward buying unloved stocks. Works well as a 10-20% satellite position for those overweight U.S. growth stocks, or as a core holding for value purists comfortable with potential multi-year underperformance. The global reach makes it particularly useful for U.S. investors seeking international value exposure without multiple funds.