Prominent US Fund Becomes Major Shareholder in Rex
The Avantis International Small Cap Value ETF (AVDV ETF), a US-based exchange-traded fund with approximately $11 billion in assets under management, has officially become a substantial shareholder in Rex International. The fund’s decision to increase its stake in the oil exploration and production company to 5.3 percent, or around 69 million shares, in July was publicly announced by the Singapore Exchange. This strategic move highlights the growing confidence of major US institutional investors in key companies listed on the SGX. The AVDV ETF is an actively managed fund that has a strong focus on finding undervalued small-cap companies in developed markets outside the US. Its investment prowess is demonstrated by its year-to-date return of 24.05 percent as of June 30, a performance that significantly outpaced the S&P 500’s 5.48 percent gain over the same period.
Growing Global Interest in Singapore’s Market
The SGX regards the AVDV ETF’s investment as a recent milestone that underscores the increasing global appeal of Singapore’s capital markets. The fund’s impressive portfolio of 30 SGX-listed companies, including Rex International, reinforces the idea that Singapore is a vital gateway for international investors seeking exposure to well-managed and agile small-cap companies. The fund’s largest holding among its SGX stocks is in Yangzijiang Financial, with an estimated 2.6 percent interest, or approximately 89.6 million shares, accounting for a noteworthy 0.6 percent of the ETF’s total portfolio. Other regional holdings include First Resources, a prominent Indonesian palm oil producer, which accounts for about 0.2 percent of the ETF’s portfolio.
Disciplined and Data-Driven Approach
The AVDV ETF’s investment philosophy is guided by a systematic and rigorous process designed to boost expected returns. As detailed in its prospectus, the fund targets companies with low valuations and strong profitability. Portfolio managers use a range of financial metrics, including the adjusted book-to-price ratio, cash flow, and accruals to evaluate a company’s value. The fund also employs the adjusted cash flow-to-book value ratio to measure a company’s profitability. Beyond quantitative data, a company’s industry classification, liquidity, float, and governance considerations are also carefully reviewed. This comprehensive process ensures that only securities meeting a set of stringent criteria are included in the diversified portfolio, with their final weight determined by a combination of market capitalization and other performance factors.
