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

Chuck Jaffe: One fund, on point for today. The expert to talk about it. This is the ETF of the Week!

Welcome to the ETF of the Week, where we get the latest take from Todd Rosenbluth, the 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 ETF investor, and to get more details on the new, newsworthy, trending, and timely exchange-traded funds that we talk about here. Todd Rosenbluth, it’s great to chat with you again!

Todd Rosenbluth: It’s great to be back, Chuck!

Chuck Jaffe: Your ETF of the Week is…

Todd Rosenbluth: The Avantis U.S. Small Cap Value ETF, AVUV.

Chuck Jaffe: AVUV, the Avantis U.S. Small Cap Value ETF! Now, small-cap value — I want to talk about that now. But we should point out this is a sister to an international fund we discussed on ETF of the Week about six months ago. So, does that crossover have anything to do with it, or is it more of that small-cap value stuff we’re discussing?

Todd Rosenbluth: I think it’s more of the small-cap value, and we’ll come to that. We’ve certainly seen investor demand and interest get rewarded for international strategies.

It’s the same active approach that Avantis, which is part of the American Century brand, offers: so, high-quality, undervalued, small-in-size companies. That’s how this overall Avantis lineup of ETFs works. This is the largest; AVUV. It just crossed $20 billion in assets under management.

The firm recently crossed $100 billion in terms of assets under management. This has been a big year for active ETFs. I wanted to kind of close the year — we’re close to the end of the year — highlighting an active ETF before we finish.

Chuck Jaffe: At the same time, this has not been a great year for small-caps. I mean, they’ve had a bit of a rally, but not much, relatively speaking. So, is part of this that you think as we head into the new year, things are going to broaden out a little bit?

Todd Rosenbluth: Yes, at least I would say I expect that to be the case. We’ll see if I’m right; people can hold me to it. But — and I might have said this beforehand, and we had some false starts for this — the Fed having cut interest rates multiple times in the fourth quarter is a good thing for smaller companies.

It’s a good thing for undervalued companies. Many people want the market rotation away from mega-cap growth stocks to occur. This is a great way of doing it. It’s strategic. It’s a relatively low-cost ETF at 25 basis points, but we think small-cap value is positioned to have a better year. And this [is]a fund that has had a strong track record despite not the most ideal environment for small-value strategies.

Chuck Jaffe: From the perspective of small-caps historically, the reason you invest in small-caps is because they don’t just diversify a portfolio, but they’re supposed to give you slightly better returns over the long run.

You know, it’s interesting — I talk with a lot of guys on Money Life where they’re looking forward and they’re saying, you know, you can’t necessarily expect historic returns as we look out for the next few years or even beyond.

Are you expecting — is it still safe in your mind, given what we’ve seen from small-caps, to say, “Hey, there is a premium for investing in small-caps; you should be better rewarded than you would be in large-caps if you hold them longer”?

Todd Rosenbluth: The data is clear that over time that has been the case. I believe small-caps are actually trading at a notable discount to their historic levels, because we’ve seen a multi-year outperformance for the large-cap growth stocks and those mega-cap stocks that we’ve talked about throughout the year. So, these stocks are relatively attractive. The value stocks certainly would be attractive from a valuation standpoint.

Is there a catalyst in 2026 to make this a better year for small-cap strategies? I think so. We shall see if that’s the case with the Fed cutting rates — an environment that favors more of a rotation. People tend to look to rotate as they start the new year, to diversify away from what’s worked as well in 2025.

So, I think small-cap value stocks could start the year off relatively well. I hope that’s the case, and then we’ll see if that persists. And of course, it’s going to come down to a market environment. If we get more volatility in the equity markets, smaller companies [have]higher reward potential but higher risk. They also can benefit if there is merger activity happening.

We’ll see if that happens in 2026. We’ll see if the consolidation that started to occur at the end of 2025 continues in 2026.

Chuck Jaffe: You mentioned that this is an actively managed fund. But as an actively managed fund, when I dug into this portfolio, it’s a little bit different because I think active management is typically somebody saying, “Let me pick the best 20 or 50 or whatever,” and concentrating things.

This portfolio is not that. This is a ton of holdings. Like — hundreds and hundreds, over 700 the last time I looked — and there’s very low turnover. So it’s active, but it’s not super active, right?

Todd Rosenbluth: That’s right, and I’m glad you called that out. So, this is a very well-diversified, more strategic approach to investing that Avantis has had years of success in doing and running strategies as well. So, it’s well-diversified. I think the top ten holdings are less than 10% of what you’d find in the portfolio; they own a lot of stocks.

And what they do is tilt towards the companies that look attractive from a valuation standpoint, that are relatively high quality — profitability being a key focus there. And then they tend to hold those stocks. So, it rebalances, or it changes throughout the year, but it’s not on a set time period the way an index-based product is. And we’ve talked about some small-cap index-based strategies.

This is active, but this is active-lighter, I would still call this. And many people do call this active management.

But it’s also worked. You know, I’m looking right now off to the side and I see this is a four-star rated Morningstar fund. It has a long enough track record. And what is particularly appealing to me is that even in the years where it’s not been in the top quartile within its peer group, it’s pretty close to the top quartile of its peer group. Certainly been above average. So, it’s consistent with its track record. It’s done well. It’s active management, but with a lower-cost, lower-turnover approach.

Chuck Jaffe: This is also an unusual fund because there is a traditional mutual fund that is considered institutional in nature, but it’s very similar. It’s AVUVX; it has the same name. It’s just a classic mutual fund instead of an ETF. It even carries the same expense ratio, which is 0.25%. I recognize, as an institutional fund, it may have minimums that are bigger and things along those lines.

Given that it gets five stars from Morningstar — which has more to do with the vagaries of how the workings go when you evaluate funds versus ETFs — if somebody is in the classic fund or wants to use classic funds, or can maybe get a break point when it comes to institutional, are you fine with this in the classic fund sense as well? Or, I mean, I know you’re an ETF guy, but is there a benefit to being in the ETF class?

Todd Rosenbluth: So, if you are a shareholder of any Avantis U.S. small-cap value strategy, the overall approach is the same. The track record is still relevant; it just matters when it started as that share class. You get the benefit of scale and expertise. If you own it, then be happy that you own it. It’s worked out, as we talked about from a track record standpoint, and I think it’s positioned well as we head into 2026.

But don’t sell something that is similar to buy something else. There is certainly a tax implication. But if you have new money to put to work, and want the benefits of intraday and tax efficiency that come with an ETF and ETF share class of a product, then AVUV is a great way to do this.

But you’re right, just to call out one thing: The industry is now starting to — in 2026 — is going to have ETF share classes of existing mutual funds. We just saw the regulators do the initial approval for that. That’s not what this is. This is a standalone product; AVUV is a standalone product that’s a good product. And we certainly think people should give it strong consideration as they head into the new year.

Chuck Jaffe: And I’m sure that in the new year, we will be talking more about some of those ETF share classes. But again, in this case, it’s a standalone ETF doing quite well. Good track record. It’s AVUV, the Avantis U.S. Small Cap Value ETF, the ETF of the Week from Todd Rosenbluth at VettaFi. Todd, great stuff. We’ll see you again next week.

Todd Rosenbluth: Great stuff to you, Chuck.

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

Now, if you’re searching for information on your favorite ETFs, or maybe what could be your next favorite ETF, like, you know, the ETF of the Week, well, go to VettaFi.com, where they’ve got a full suite of tools that will help you out. 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. Make sure you don’t miss an episode by following along on your favorite podcast app. We will be on a holiday schedule, but we will be back for the holiday weeks, so make sure you see us then. And until then, happy holidays and happy investing!

Note: This article was created in part through assistance from AI tools. The content has been thoroughly reviewed and edited by the author.

For more news, information, and strategy, visit the Core Strategies Content Hub.