Why I invest in Avantis ETFs
- Robin Powell
- 6 hours ago
- 10 min read
Investors are drawn to big financial brands. Firms that sponsor stadiums and take out full-page ads. But the best funds are often managed by companies most people have never heard of. Avantis Investors is one of them. Built on more than 80 years of academic research, it's quietly grown to $110 billion by following the evidence on value and profitability. Here I explain the methodology, the risks, and why I invest with Avantis myself.
Note: This is neither a recommendation, nor financial advice, and I have no connection with Avantis Investors.
I spent years reading the evidence on factor investing. Small caps outperform large caps over time. Value stocks beat growth. Profitable companies deliver higher returns than unprofitable ones. The academic case was solid.
For UK investors who wanted to act on it? The options were limited.
If you worked with an adviser who used funds from Dimensional Fund Advisors, you were sorted, and that remains an excellent option. But for DIY investors who wanted to tilt toward these factors, the options were very limited. US-listed ETFs existed, but PRIIPs regulations meant UK platforms couldn't sell them to retail investors. You'd read about American investors on Reddit building portfolios with funds you couldn't touch.
This wasn't some fringe strategy. Dimensional manages more than $800 billion globally. Avantis Investors has grown to $110 billion in six years. Advisers and institutions worldwide have embraced systematic factor investing. But DIY investors outside the US were unable to act on it.
Then, in late 2024, something changed. Avantis launched UCITS versions of their funds. Listed in London. Available on mainstream UK platforms. Open to individual investors.
I invest in in three Avantis funds myself, and this article explains why.
Why the obvious alternatives fall short
Most actively managed funds underperform their benchmarks. This isn't opinion. It's been measured repeatedly, across decades, in every market.
The latest SPIVA scorecards tells the familiar story. Over ten years to December 2024, roughly 90% of equity funds globally failed to beat their benchmark. These figures adjust for survivorship bias. Include the funds that quietly closed or merged away their poor records, and the picture looks worse.
So passive investing wins. Buy a cheap tracker and move on with your life.
That's the conclusion I came to years ago. And it's not wrong. A global index fund at 0.10% beats almost any actively managed alternative over time. For most investors, that's the right answer.
But it leaves something on the table.
Academic evidence suggests certain types of stocks deliver higher expected returns than the market average. Smaller companies. Cheaper companies. More profitable companies. A pure market-cap index doesn't tilt toward these characteristics. It holds everything in proportion to size.
What about "smart beta" ETFs that track value indices or small-cap indices? The problem is implementation. A rules-based index rebalances on a fixed schedule. It buys and sells mechanically, regardless of trading costs or whether prices have moved since the index was constructed. No flexibility.
For both Avantis and Dimensional, optimal factor investing requires thousands of daily decisions about which securities to hold, how to weight them, when to trade. That's arguably active management, but not the kind that relies on star managers or gut instinct.
Systematic investing with Avantis ETFs
Avantis isn't trying to beat the market through brilliant stock picks. It's trying to own more of the stocks that academic research says have higher expected returns. Thousands of them. Weighted systematically. Rebalanced with flexibility rather than rigid index rules.
The firm was founded in 2019 by Eduardo Repetto, formerly co-CEO and chief investment officer at Dimensional. He brought several colleagues with him. Their pitch wasn't revolutionary. It was familiar: the same evidence-based approach Dimensional had used for decades, now packaged for a broader audience.
"We set up Avantis to systematise active management," Repetto explained on the Rational Reminder podcast in 2024. "If you are able to analyse more securities at a lower cost, you can provide value added and you can provide diversification and you can provide all that at low cost."
The academic foundation
The theoretical case for suing Avantis funds starts with a simple equation. A stock's price reflects its expected future profits, discounted back to today. If two companies have identical profits but one trades at half the price, the cheaper one offers a higher expected return. That's the value premium.
The same logic works in reverse. If two companies trade at the same price but one is more profitable, the more profitable company offers higher expected returns. That's the profitability premium.
Value and profitability aren't competing factors. They're two routes to the same destination.
Robert Novy-Marx demonstrated this in his 2013 paper The other side of value. Gross profitability has roughly the same power as book-to-market (the classic value metric) in predicting stock returns. The two work independently. Buying cheap stocks is good. Buying profitable stocks is good. Buying cheap and profitable stocks is better than either alone.
The Fama-French five-factor model, published in 2015, built on this work. Eugene Fama and Kenneth French added profitability and investment patterns to their original three factors (market, size, value). The expanded model explained more variation in stock returns than any previous framework.
Does this show up in real returns? Yes. Over 83 years of US data, stocks ranking high on both value and profitability delivered average monthly returns of 1.50% to 1.54%. Stocks ranking low on both delivered 0.45%.
This pattern holds internationally. Research by Sunil Wahal and Eduardo Repetto found similar results across developed and emerging markets. In emerging market small caps, the spread was even wider: 16.46% annual returns for high-value, high-profitability stocks versus 1.10% for the opposite corner.
The Fama-French research adds another dimension: investment patterns. Companies that invest conservatively tend to outperform those that spend aggressively on expansion. The worst-performing corner? Unprofitable companies investing heavily. They destroyed value over the 50-year study period.
Has this evidence held up? A March 2025 paper by Novy-Marx and Mamdouh Medhat reviewed what we've learned since the original profitability research. Their conclusion: profitability subsumes all of "quality" investing. It also explains half of value's underperformance since 2007. The factor has proven resilient across time and geography.
How Avantis implements it
Avantis incorporates all of this. Not through a fixed index methodology, but through daily portfolio decisions guided by these characteristics. It hold around 3,000 stocks in its global equity fund, and around 1,300 in its small-cap value fund. Diversified. Systematic. Low turnover.
It's an approach investors have warned to. Avantis reached $110 billion in assets under management in January 2026, up from $50 billion 18 months earlier. American Century Investments, the parent company, provides institutional infrastructure. And there's an unusual backstory: over 40% of American Century's dividends go to the Stowers Institute for Medical Research. More than $2 billion since 2000.
None of this guarantees future returns. But it tells you who built this and why.
What I own
I have a fairly simple portfolio myself. One half is in broadly diversified and very low-cost, market-cap-weighted index funds. The other half is in funds that tilt, to some degree or other, to specific risk factors that have outperformed the broader market over the very long term
I hold three Avantis ETFs in my ISA. Each serves a different purpose.
Remember, none of this is a recommendation. It's disclosure.
Avantis Global Equity UCITS ETF (AVCG)
This is my core holding. Think of it as a global tracker with a slight factor tilt. It holds over 3,000 stocks across developed markets, including large, mid, and small caps. Unlike a pure market-cap index, it tilts modestly toward cheaper, more profitable companies.
The total expense ratio, or TER, is 0.22%. More expensive than a cap-weighted global tracker, but not dramatically so. The question is whether the tilt adds enough expected return to justify the extra cost. I think it does. Others will disagree.
Avantis Global Small Cap Value UCITS ETF (AVSG)
This is the factor exposure I wanted most. Small-cap value stocks sit in the corner of the market where expected returns have historically been highest.
The fund holds around 1,300 stocks across developed markets, screened for value and profitability. The TER is 0.39%. Not cheap by index fund standards, but this isn't a traditional index fund. It's making active decisions about which small-cap value stocks to own and how to weight them.
Early performance has been solid. From inception in September 2024 to the end of November 2025, the fund returned 15.58%, compared to 13.92% for its MSCI benchmark. But that's barely a year. Far too short to draw conclusions. I plan on holding this for decades.
The trade-off is volatility. Small-cap value swings harder than the broad market. Value itself spent much of the 2010s underperforming growth. That could happen again. I'm accepting that risk because I believe expected returns are higher over the long term.
Avantis Emerging Markets Equity UCITS ETF (AVEG)
Emerging markets are notoriously volatile. Many EM indices include speculative, unprofitable companies I'd rather avoid. This fund applies the same value and profitability screens, filtering out the lowest-quality stocks.
The TER is 0.35%. The fund launched in December 2024, so there's no track record yet. I'm comfortable with that because I trust the methodology. But it's the smallest of my three positions.
Together, these three funds give me global equity exposure with systematic factor tilts.
Again, not a recommendation. just what I do.
What could go wrong
I could be making a mistake. Factor premiums are expected, not guaranteed. The past 80 years of data don't obligate the next 30 to behave the same way.
Start with the obvious: these funds are very new. We have barely a year of live performance. Backtests don't capture real-world trading costs, liquidity constraints, or the gap between theoretical portfolios and actual implementation. The funds could underperform their own methodology.
Then there's value itself. From 2010 to 2020, value stocks lagged growth stocks badly. A decade. Investors who tilted toward value in 2010 spent ten years watching their approach underperform while everyone else rode the growth wave. Some gave up. The ones who held on were eventually rewarded when value came roaring back.
But "eventually" can feel like forever when you're living through it.
Could that happen again? Of course. Factor premiums aren't compensation for nothing. They're compensation for risk and discomfort. If value always outperformed, everyone would pile in, and the premium would disappear.
Volatility matters too. AVSG runs at around 19% annualised volatility. That's meaningfully higher than a global tracker. Drawdowns will be sharper. If you can't stomach watching a position fall 25% or more, this isn't a fund for you.
My circumstances aren't yours. I have a long time horizon. I have other assets. I can afford to be wrong about this for a decade and still be fine. You might not be.
Where to find Avantis ETFs
UK investors
All three funds I've mentioned here are available on major UK platforms: Hargreaves Lansdown, AJ Bell, Interactive Investor, Fidelity Personal Investing, InvestEngine, Trading 212, Freetrade, Charles Stanley Direct. You can hold them in an ISA, SIPP, or general investment account.
One exception is Vanguard Investor, which only offers Vanguard funds.
Tax treatment is straightforward. These are Irish-domiciled UCITS ETFs with UK Reporting Fund status. Inside an ISA or SIPP, no complications. You can verify the reporting fund status on HMRC's published list.
Some platforms classify these as "complex" products because they're actively managed. You might need to answer a short questionnaire. It only takes two minutes.
Irish investors can access the same Irish-domiciled UCITS funds through local brokers. The funds are listed on Euronext Dublin as well as the London Stock Exchange.
US investors
You've had access to Avantis funds since 2019. Avantis US-listed ETFs trade on NYSE Arca and NASDAQ. Popular funds include AVUV (US Small Cap Value), AVDV (International Small Cap Value), AVEM (Emerging Markets), and AVUS (US Equity). Any major broker will have them.
Canadian investors
You can buy US-listed Avantis ETFs through brokers with US market access, like Questrade or Interactive Brokers. Be aware of currency conversion costs and potential withholding tax implications depending on account type.
The good news is that CIBC Asset Management recently filed a preliminary prospectus to launch eight Canadian Avantis ETFs. These should make access simpler and more tax-efficient when they arrive.
Australian investors
Avantis entered Australia in October 2025. Three ETFs are now available on Cboe Australia: AVTS (Global Small Cap Value), AVTG (Global Equity), and AVTE (Emerging Markets). Fees range from 0.30% to 0.49%. These are "dual access" vehicles — you can invest via ETF or managed fund.
Before you invest
Know your situation. What's your time horizon? How would you react to a 25% drop? Do these funds fit with what you already own, or are you adding unnecessary complexity?
I can't answer those questions for you. Nobody can, except you and possibly an adviser who knows your circumstances.
If you want to dig deeper, Avantis publishes detailed methodology documents on its website. The Rational Reminder podcast has interviewed Eduardo Repetto twice. Both episodes are worth your time.
The door is open
For years, UK investors who believed the evidence on factor investing faced a choice. Pay for adviser access to Dimensional, or settle for pure market-cap indexing and accept you were leaving potential returns on the table.
Avantis ETFs changed that. Not with a revolutionary new idea, but by packaging decades of academic research into funds ordinary investors can buy directly. Listed in London. Available on the platforms you already use.
I chose to invest with Avantis. Whether you do is your decision, based on your circumstances, your risk tolerance, and your time horizon. I've tried to explain my reasoning honestly, including the parts where I might be wrong.
If you're in any doubt about what to do, I strongly urge you to talk to a regulated financial adviser with an evidence-based investment philosophy.
Resources
S&P Dow Jones Indices. (2024). SPIVA Global Scorecard Year-End 2024.
Novy-Marx, R. (2013). The other side of value: The gross profitability premium. Journal of Financial Economics, 108(1), 1–28.
Fama, E. F., & French, K. R. (2015). A five-factor asset pricing model. Journal of Financial Economics, 116(1), 1–22.
Wahal, S., & Repetto, E. (2023). The joint distribution of value and profitability: International evidence. Avantis Investors.
Novy-Marx, R., & Medhat, M. (2025). Profitability retrospective: What have we learned? (NBER Working Paper No. 33601). National Bureau of Economic Research.
Avantis Investors. (2024). Our scientific approach to investing. American Century Investments.
Disclosure
This article reflects my personal investment decisions and is not financial advice. I own the Avantis ETFs mentioned. I have no commercial relationship with Avantis Investors or American Century Investments.
Past performance is not a guide to future returns. The value of investments can fall as well as rise, and you may get back less than you invest. If you're unsure whether these funds are right for you, speak to a financial adviser.
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