ETF Education Report: ALPHA ARCHITECT GLOBAL FACTOR EQUITY ETF (AAVM)

What this ETF is trying to do

The ALPHA ARCHITECT GLOBAL FACTOR EQUITY ETF (AAVM) is an exchange-traded fund that focuses on different "factors" in the stock market. Based on its top holdings, it uses various strategies like quantitative value and momentum to pick investments. It holds a mix of US and international assets.

What the numbers show

The current price of AAVM is $33.87. When looking at how the fund has performed, it is important to understand two different types of returns: price return (how much the share price changed) and total return (which includes both price changes and distributions).

• Year-to-Date (YTD): The YTD price return is approximately 14.74%. For this fund, the YTD total return is also approximately 14.74%.

• One Year: The one-year price return was approximately 16.75%. The one-year total return was higher, at approximately 19.14%.

• Three Years: The three-year price return was approximately 56.37%, while the three-year total return was approximately 70.33%.

To visualize this, if you look at the estimated price from roughly one year ago, it was about $29.01.

Income and distribution explanation

This ETF provides some cash to investors through distributions. The distribution yield is approximately 1.79%. In the last 12 months, there was one distribution of approximately $0.61 per share. The frequency of these payments is described as irregular or less frequent. It is important to remember that a distribution yield shows how much cash is paid out relative to the price, but it is not the same thing as your total return.

NAV erosion explanation

"NAV erosion" refers to a situation where the value of the underlying assets in the fund decreases significantly. StockValueFinder uses an "erosion-risk score" to help monitor this. For AAVM, the erosion score is 100, and the label indicates "No price erosion detected." There is no severe erosion-risk flag for this ETF.

Top Holdings

The fund's portfolio includes the following holdings:

• ALPHA ARCHITECT US QUANTITATIVE VAL ETF (29.60%)

• ALPHA ARCHITECT INTL QUANT VAL ETF (27.50%)

• ALPHA ARCHITECT INTL QUANT MOMT ETF (22.73%)

• ALPHA ARCHITECT US QUANTITATIVE MOMT ETF (19.69%)

• FIRST AMERICAN GOVERNMENT OBLIGS X (0.48%)

*Note: Holdings can change over time.*

Pros

• The fund has shown positive price returns and total returns over the one-year and three-year periods.

• The erosion-risk measurement is rated as "good."

Cons

• Distributions are irregular and occur less frequently.

Beginner takeaway

When looking at AAVM, notice the difference between price return and total return. The total return is higher because it accounts for the cash distributions paid out to investors. Always look at both numbers to see the full picture of how an investment has performed.