I<\/span> was browsing a list of ETFs the other day, as you do, when I stumbled upon something I\u2019ve been waiting a very long time for: a global small cap value ETF<\/strong>.<\/p>\n Value stocks are the subset of risky stocks that are deemed \u2018undervalued\u2019 by investors.<\/p>\n According to the value thesis, these ugly ducklings are excessively shunned, lowering their price relative to their potential.<\/p>\n Hence, you can pick them up for a song, Moneyball<\/em> style, and wait for them to outperform the market over time as their true worth is realised.<\/p>\n But the risk premium<\/strong> associated with value \u2013 the performance bonus potentially available beyond the market return \u2013 is overwhelmingly concentrated in the small cap corner of the stock universe.<\/p>\n This means you can only really expect value to pay off when you invest in firms that are both smaller and cheaper<\/strong> on balance.<\/p>\n We can verify this using long-run data going back to 1927. The record shows that long-only US small cap value beat the US market by 2% per year on average.<\/p>\n Value works in other world markets too. I\u2019ll post some charts in a follow-up post.<\/p>\n For now, I\u2019ll just comment that there\u2019s no reason to think the value premium<\/a> is dead, though it\u2019s underperformed in the US since 2013.<\/p>\n The data also confirms that large cap value does not deliver \u2013 at least not in the long-only form we can invest in.<\/p>\n Ideally then, to capitalise on the value premium we\u2019d invest in:<\/p>\n It\u2019s always been impossible for UK DIY investors to tick all those boxes \u2013 until now.<\/p>\n The Avantis Global Small Cap Value ETF<\/a> (AVSG) checks them all. So much so that I invested in it before finishing this review!<\/p>\n Hopefully by the time your patience runs out I\u2019ll have explained why I\u2019m so impressed.<\/p>\n We want a fund that:<\/p>\n We should also be able to use widely accepted valuation metrics to check that the fund is doing its job.<\/p>\n The AVSG ETF delivers on all of those points. I\u2019ll show you how with some data in a sec.<\/p>\n Track record is the glaring omission from my criteria above.<\/p>\n Aren\u2019t returns important?<\/p>\n Yes, once we have five years worth of results (and ideally much more) we can test a fund against its direct competitors.<\/p>\n But AVSG only launched in September 2024. Hence there\u2019s no way to pit it against rivals in a worthwhile apples-to-apples performance contest.<\/p>\n Moreover, the UK\u2019s Soviet-style supermarket of small value funds means we\u2019d be comparing an apple with a turnip, one mouldy potato, and a suspicious-looking purple thing.<\/p>\n Happily though Avantis has been operating in the US since 2019. The consensus from the critics has generally been a big thumbs-up, and investors have rewarded the brand by moving billions<\/a> into Avantis ETFs.<\/p>\n What\u2019s more, we can try to reassure ourselves that AVSG specifically won\u2019t prove to be a lemon in the UK by checking how its US-domiciled equivalents have fared since their launch in September 2019.<\/p>\n That\u2019s possible because AVSG covers the same territory as two US ETF stablemates:<\/p>\n Let\u2019s match those two ETFs against their competitors using the amazing Portfolio Visualizer<\/a> tool to see how they\u2019ve performed.<\/p>\n Avantis\u2019 main rival in this category is Dimensional Fund Advisors (DFA):<\/p>\n It\u2019s a dead heat! The annualised nominal USD returns for the two funds over the longest comparable time frame (October 2019 to end of April 2025) were:<\/p>\n DFA has been the acknowledged master of the investible value factor since the early 1990s. Matching the DFA fund from launch is no mean feat.<\/p>\n And while DFA funds are available in the UK, that\u2019s only via financial advisors.<\/p>\n This frustrating situation may be changing \u2013 the firm is advertising for ETF roles in Europe. Previously DFA has made its funds available to the wider American public in ETF form, too.<\/p>\n But for now the DFA funds are no-go in the UK if you\u2019re going it alone.<\/p>\n Focusing specifically on the US, Avantis bossed a wider field of contenders in this category:<\/p>\n Again these annualised returns hail from the longest time period available, October 2019 until end of April 2025:<\/p>\n These results, plus the products\u2019 underlying metrics and the analysis of Avantis\u2019 ETFs by noted US commentators such as Allan Roth<\/a> and Larry Swedroe \u2013 not to mention the well-informed Bogleheads<\/em> community running a slide rule over them, too \u2013 dispels any concern I have about Avantis being an unknown quantity.<\/p>\n The Avantis funds are doing an excellent job in the US and I have no reason to think they won\u2019t do the same in Europe.<\/p>\n I believe AVSG is the real deal, and I think we can independently verify its small cap value credentials using data aggregator Morningstar.<\/p>\n Morningstar provides the only way I know of to compare the factor exposures of funds available to UK investors.<\/p>\n First, go to the Portfolio page of AVSG\u2019s Morningstar profile<\/a>.<\/p>\n Then check out the Stock Style section:<\/p>\n Excellent!<\/p>\n That\u2019s better than DFA\u2019s Global Targeted Value fund<\/a>:<\/p>\n You can see that DFA\u2019s fund isn\u2019t as small value-y as AVSG.<\/p>\n ZPRV<\/a>, the SPDR MSCI USA Small Cap Value ETF, does contain more small value exposure:<\/p>\n However it\u2019s 100% US and hence less diversified. (You can pair ZPRV with ZPRX for the European dimension, but you\u2019re still not covering as much of the planet and with twice as much hassle.)<\/p>\n Finally, here\u2019s the iShares Edge MSCI World Value Factor ETF (IWVL<\/a>):<\/p>\nSmall bargains<\/h4>\n
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What makes for a strong small cap value fund?<\/h2>\n
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What about track record?<\/h3>\n
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International small cap value face-off<\/h4>\n
![\"\"](\"https:\/\/i0.wp.com\/monevator.com\/wp-content\/uploads\/2025\/05\/AVDV-vs-DISVX-chart.png?resize=1552%2C878&ssl=1\")
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US small cap value face-off<\/h4>\n
![\"\"](\"https:\/\/i0.wp.com\/monevator.com\/wp-content\/uploads\/2025\/05\/AVUV-versus-the-rest_chart.png?resize=1335%2C737&ssl=1\")
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Is AVSG a good small cap value ETF?<\/h2>\n
![\"\"](\"https:\/\/i0.wp.com\/monevator.com\/wp-content\/uploads\/2025\/05\/AVSG-style-weightings.png?resize=383%2C313&ssl=1\")
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The bulk of AVSG is found in the small value square of the grid.<\/p>\n![\"\"](\"https:\/\/i0.wp.com\/monevator.com\/wp-content\/uploads\/2025\/05\/DFA-stock-style.png?resize=334%2C293&ssl=1\")
<\/a><\/p>\n![\"\"](\"https:\/\/i0.wp.com\/monevator.com\/wp-content\/uploads\/2025\/05\/ZPRV-stock-style.png?resize=365%2C293&ssl=1\")
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![\"\"](\"https:\/\/i0.wp.com\/monevator.com\/wp-content\/uploads\/2025\/05\/IWVL-stock-style.png?resize=361%2C295&ssl=1\")
<\/a>![\"\"](\"https:\/\/i0.wp.com\/monevator.com\/wp-content\/uploads\/2025\/05\/AVSG-style-measures_valuation-metrics-copy.png?resize=601%2C450&ssl=1\")
<\/a><\/p>\n![\"\"](\"https:\/\/i0.wp.com\/monevator.com\/wp-content\/uploads\/2025\/05\/AVSG-factor-profile-2.png?resize=569%2C337&ssl=1\")
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