On this episode of the ETF of the Week podcast, VettaFi’s Head of Research Todd Rosenbluth discussed the Avantis International Small Cap Value ETF (AVDV) with Chuck Jaffe of Money Life. The pair discussed several topics related to the fund to give investors a deeper understanding of the ETF overall.

Chuck Jaffe: One fund, on point for today, the expert to talk about it. Welcome to the ETF of the Week. Yes, this is the ETF of the Week, where we get the latest take from Todd Rosenbluth, head of research at VettaFi. And if you go to VettaFi.com, you’ll find all the tools you need to be a savvier, smarter investor in ETFs, and to get more details on the new, newsworthy, trending, and timely ETFs that we discuss here. Todd Rosenbluth, it’s great to chat with you again!

Todd Rosenbluth: It’s my pleasure!

Chuck Jaffe: Your ETF of the Week is…

Todd Rosenbluth: The Avantis International Small Cap Value ETF, AVDV.

Chuck Jaffe: A-V-D-V, the Avantis International Small Cap Value ETF. Small-cap? Well, we’ve been waiting for a small-cap rally. International? We’ve been watching a big year in international. But there’s some concern about how that might be changing and what’s going on with tariffs. So, what’s your reasoning for this fund being the ETF of the Week now?

Todd Rosenbluth: So, a few things caught my eye with this Avantis ETF. Through July, it was up more than 25% for the year. It’s outperforming an all-country world small-cap index, and it recently crossed the $10 billion mark. This is an actively managed ETF from a proven active manager for folks who want to have overseas exposure.

We’ve talked mostly, when we’ve focused on international investments this year, on the large-cap space. I think we’ve often focused on the index space or some of the active products, but this is a small-cap value fund. Avantis has a strong record of small and value strategies. This one really caught my eye.

Chuck Jaffe: In terms of the international side of things, we should point out that we are recording this in advance to accommodate travel schedules. We’re just still getting to a resolution on some of the tariff things, so this has been recorded more than a week before it airs to our audience.

But I’m curious, because if you’re picking this, knowing that we’ve got a little bit of a time lag, you’ve got to be convinced that we’ve seen much of the tariff impact, or that we’re not going to have anything that is scary, like, OK, as we get some final adjustment here, right? Is part of the reason for international now that we’re finally getting some clarity in your mind?

Todd Rosenbluth: We are starting to get some clarity. The volatility seems to have slowed . A number of initial trade deals have been announced by the time you and I are talking about it, but smaller companies tend to be more locally based. My understanding is the tariff impact is going to be greatest for companies that are shipping to the United States that have overseas revenue streams.

The smaller companies you find in Canada or France or the United Kingdom, to name just some of the markets you’d get exposure to through this ETF. These companies are not the ones you would normally know the names of.

These are lesser-known, more locally based companies I think provide some insulation based on the volatility that’s going on. Then there’s the fact that this is a value slice or a portfolio focusing on valuation. You’re finding things that have likely pulled back in advance and, according to management, have some opportunities to improve.

Chuck Jaffe: When we talk about international ETFs, you’re frequently banging the drum on investors, going “you may not love diversification, but the stories say domestic investors don’t have enough international exposure.”

Well, if they don’t have enough international exposure, they particularly don’t have it for small-caps. So, for you, is part of that thinking “why this fund now?” Because we’ve seen a big run on international, so folks have leaned in a little bit this year. But again, they’ve been leaning in the sweeter spots, not necessarily the small?

Todd Rosenbluth: Correct. When I think of what we see in U.S.-based investors’ portfolios, their international exposure tends to be more market-cap-weighted. It’s exposure to the FTSE-based strategies, where the largest companies — the Nestles of the world — come to mind as a large-cap developed markets company. The smaller companies are underexposed, we find, within portfolios.

But yet, $10 billion is now in this Avantis ETF. So, it shows that when investors are turning to international small-caps, this is one of the funds they’re focusing on. I think for a good reason, the track record is appealing. It’s also relatively low cost to get exposure to international small-caps — just 36 basis points is the fee.

Chuck Jaffe: I was going to ask about expenses again — 36 basis points. We haven’t really talked about management. This is actively managed. I mean, most investors, as you said, wouldn’t necessarily recognize the companies in here, but they wouldn’t if they were looking at a small-cap international index, either. So this is active management that is making the calls on this.

Todd Rosenbluth: That’s correct. So this is actively managed. Just to level-set a little bit, the portfolio has over 1,400 stocks. So it’s owning [a broad array]of international small-cap companies. Avantis tends to favor companies that have attractive valuations that are higher quality in terms of this and have the stability of their operations.

And yes, smaller size. The active management is not heavy-handed. This is not a concentrated portfolio favoring a small — pun intended — a few number of stocks in particular, but yet 1,400 of them are well-diversified across geographies and sectors.

Chuck Jaffe: What that also says is that maybe somebody needs to be considering what they are getting with this fund from the standpoint that we just were talking about. You know, “Hey, maybe you want to get your exposure to international small-caps this way.” Well, this, with 1,400. Actively managed, but 1,400 is much broader, is likely to have a little bit less volatility than something that is concentrated. If somebody wants to add a little bit more “juice” in this space, might they want to be looking at something or at least compare this before they invest to something that has a much smaller portfolio?

Todd Rosenbluth: Yes. You certainly want to see the other choices that are out there. International, small-cap, and concentrated don’t as easily go hand-in-hand together in the ETF wrapper, that might exist. I’m struggling to think of one off the top of my head. Many people are underexposed to the space, and I think they should have more, or they should certainly be considering it.

In the U.S., we tend to have a hefty weighting or reasonable weighting to small-caps within our portfolios. I think many investors are missing out. This is a great fund to get diversified exposure, and the active management has been adding value based on its track record. I believe this is actually a four-star Morningstar-rated fund, the last time I looked.

Chuck Jaffe: It is, indeed, a four-star fund. And again, what they’d be missing out on? Well, this year, [the]fund is up about 27% through July. It’s the Avantis International Small Cap Value ETF, AVDV, the ETF of the Week from Todd Rosenbluth at VettaFi. Todd, happy travels. We’ll see you again next week!

Todd Rosenbluth: Thanks a lot.

Chuck Jaffe: The ETF of the Week is a joint production of VettaFi and Money Life with Chuck Jaffe. I’m Chuck Jaffe, and I’d love it if you would check out my hour-long weekday podcast by going to MoneyLifeShow.com, or by searching for it wherever you find your favorite podcasts.

Now, if you’re searching for information on your favorite exchange traded funds, or maybe your next favorite ETFs, go to VettaFi.com, where they’ve got a full suite of tools that’s going to help you make sure that yours are staying your favorites. They’re on X at @Vetta_Fi. Todd Rosenbluth, their head of research, my guest. He’s on X as well, at @ToddRosenbluth.

The ETF of the Week is here for you every Thursday, whether Todd or I are here or not. So make sure you follow along so that you never miss an episode. We’re on your favorite podcast app, and we’ll be back next week with another ETF for you to consider. Until then, happy investing, everybody!

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