ETF TV News #92 Eduardo Repetto, Avantis Investors discusses investing in value and real estate ETFs on ETF TV

Presented by Syntax Advisors.

Margareta Hricova: Welcome to ETF TV – your insight into the world of exchange traded funds, issuers and investment. I’m Margareta Hricova and joining me today is Deborah Fuhr and Eduardo Repetto, Chief Investment Officer at Aventis Investors.

Welcome to the show.

Eduardo Repetto: Thank you for having us.

Deborah Fuhr: Thank you.

Margareta Hricova: Eduardo, can you tell us briefly about the background of launching Aventis Investors?

Eduardo Repetto: We were very lucky to get together with the American Century and create Avantis Investors. Two years later, you can see we have 12 investment ETFs, three in fixed income, nine in equities, and more than seven billion dollars in assets. Also, we have eight mutual funds, so things are going well as investors like what we do.

Deborah Fuhr: Last week you launched an EM International and US large cap value set of ETFs, as well as a real estate ETF on the New York Stock Exchange. Why do you think now is a good time to invest in value and also in real estate?

Eduardo Repetto: We think that it is always a good idea to invest in diversified portfolios, and we provide state-of-the-art value portfolios. The way we define value is a little bit different than the conventional investor, it is more modern and is able to capture higher returns in our opinion, and real estate is a good could diversifier as many investors need to invest in real estate. And we provide a very interesting global real estate product at a very attractive fee.

Deborah Fuhr: And when you say the way you do value is different, can you talk a little bit about what is different about the way you do it?

Eduardo Repetto: Many people look for a low price, low price is value for everyone. But look, if you buy low price something, you may not get what you want. Maybe you get something that is not the right quality. Imagine buying low quality sushi. I want low-priced sushi, and then you go to a gas station and buy sushi. Will you eat that? Probably not. This is the same. You want to buy something that is at a very attractive price that is providing the necessary cash flows for the company to provide returns to you. So you have to look at the whole set of financials, not just the price.

Margareta Hricova: You typically are offering both an ETF and a mutual fund on the same strategy. What type of investors are using the ETFs and what types are using mutual funds?

Eduardo Repetto: That’s a very interesting question. So if you think of our mutual funds, there is a set of investors that like 401K plans, that don’t really offset down because of operations to buy a mutual funds or CITs. And we can provide both, mutual funds or CITs.

The typical ETF investor is someone that is structural or just a client or a financial advisor that is trying to grow their assets over time. They don’t have the operational restriction that 401K plans have because of record keeping and all the different setups that operate the trades overnight. Some 401K money, some money goes into mutual funds, but most of our money comes into ETF. It is a more modern day as so many people have adopted it.

Deborah Fuhr: Besides the 401K product, do you see people using mutual funds and ETFs differently when they are using them both?

Eduardo Repetto: Investors we deal with, generally we deal with conventional advisors or wealth managers that allocate for their clients? They think about asset allocation, so they’re using our funds or ETFs to create components in an asset allocation that is designed to achieve the advisor client’s investment goals over time. And so in general, our clients in mutual funds and ETFs are trying to do the same. They’re trying to create an asset allocation for a long-term investment process.

Margareta Hricova: And how does your team at Avantis Investors work with ETF team at American Century?

Eduardo Repetto: We are part of American Century, so the capital markets team fx, it’s a very deep team set at American Century with great talent, that is our capital markets team. The IT, the operations, the legal and the compliance; all these people are American Century, are working with us to provide investment solutions for our clients.

Deborah Fuhr: So you’ve had a good run for two years. Do you think that you’ll be launching more ETFs?

Eduardo Repetto: Oh, you bet. This is just the beginning, let’s put it that way.

We launched some ETFs back in 2019 and those ETFs grew. We launched fixed income. Now, in the last two weeks, we launched four new ETFs and we already have more in the dock, so they are going to come, probably, three months from now. People are asking us to do this and to do that, and ideally we would do everything today. But you have to pay so you cannot do everything at the same time.

So we get there. We launch much more. You would see us.

Deborah Fuhr: That’s great. Thank you so much for joining us.

Eduardo Repetto: It’s a pleasure.

Margareta Hricova: Debbie. Can you tell us about some of the other news in the ETF industry?

Deborah Fuhr: Last week was a pretty active week. We had 63 new listings from 38 issuers, and 23 new cross-listings, so we’ve seen a very significant increase in the number of products being listed this year. We haven’t seen a very significant increase in the number of D-listings. So net we are up in terms of overall listings.

Carbon credits are now becoming a topic that we see ETFs being listed on. KraneShares had done one a while ago in the US, we saw four of them being launched in Korea. We’ve seen a lot of new activity in Asia and also in Europe.

ESG is definitely one of the themes as we’re seeing a few more active ETFs come to market. So I think the trends that we’ve been seeing over the year have been pretty consistent. We also saw the announcement that Motley Fool will be converting to a mutual fund into ETFs before the end of the year with about a billion dollars in assets. So that conversion is still happening, even though we do have the threat of some of the tax benefits of ETFs going away, but people don’t expect that the US Senate will pass it.

We’re seeing a lot of interest in crypto and digital, in Mexico, the exchange is trying to get approval to be able to list digital futures, as well as crypto ETFs or ETPs. So a lot of similar trends, but it has been an exciting year when we think about flows and assets and all the new launches.

We’ll be looking forward to next week talking about the new level of assets andflows that we’ve seen come into the industry during the month of September.

Margareta Hricova: Thanks, Debbie, and thank you to our sponsors, Syntax Advisors, to Eduardo and to all of you for watching. To watch prior episodes and to see news from the ETF industry, visit ETFTV.NET.

ETF TV News does not provide investment advice, nor recommend products.

Published on October 6, 2021