AVLC targets U.S. large caps but tilts toward companies with stronger profitability metrics and lower valuations than the S&P 500. This systematic value approach aims to capture the premium that profitable, reasonably-priced companies have historically delivered over pure market-cap weighting.
How It Works
The fund starts with a broad universe of U.S. large caps, then overweights stocks showing high profitability (measured by metrics like return on assets) and attractive valuations relative to fundamentals. Unlike traditional value funds that might own junk, AVLC demands both quality and reasonable price. The systematic rebalancing maintains these factor exposures while keeping turnover moderate.
Key Features
- Combines profitability and value factors rather than chasing one metric
- Lower concentration than cap-weighted indices reduces single-stock blowup risk
- Avantis's academic approach backed by dimensional fund advisors' research heritage
Risks
- Value tilt could underperform growth stocks for years, as happened 2010-2020
- Factor exposures may drift during market extremes when correlations break down
- Limited track record since 2023 launch means real-world behavior untested in major drawdowns
Who Should Own This
Best for investors who believe market-cap weighting is flawed and want systematic exposure to profitable value stocks without the deep value risks. Works as a core equity holding for those willing to accept potential multi-year underperformance versus the S&P 500 in exchange for better long-term risk-adjusted returns.