AVUS Outpaced VTI by 16 Points Over 5 Years. Is It the Better Core Holding?

Most broad U.S. equity ETFs just buy the market. Avantis U.S. Equity ETF (NYSEARCA:AVUS) does something subtler: it buys most of the market, then tilts the portfolio toward stocks that are cheaper relative to their fundamentals and more profitable than their peers. The result resembles an index fund but behaves differently in practice.

What AVUS Is Actually Built to Do

AVUS is designed to serve as a core domestic equity holding, the kind of position that anchors a portfolio rather than adding a specific thematic bet. It launched in September 2019 and has since grown to $11.3 billion in assets, reflecting genuine adoption as a long-term holding rather than a trading vehicle.

The return engine is factor-based investing, specifically the value and profitability factors identified in academic finance research. Avantis, which operates under American Century, was founded by former Dimensional Fund Advisors executives and applies a similar philosophy: own a broad swath of U.S. equities, but systematically overweight companies trading at lower valuations with stronger earnings power. The fund is not passive in the strict sense, but portfolio turnover sits at just 2%, meaning it holds positions patiently rather than trading actively.

The cost structure reinforces the core-holding case. The expense ratio is 0.15%, low enough to compete directly with plain index funds while offering a differentiated strategy.

How It Compares to the Obvious Alternative

The natural benchmark is Vanguard Total Stock Market ETF, which simply tracks the entire investable U.S. equity market. The performance gap between the two has been meaningful. Over the past year, AVUS returned 19.3% versus VTI’s 14.3%. Over five years, AVUS gained 73% compared to VTI’s 57%. That gap is the factor tilt doing its job.

Year-to-date in 2026, AVUS is up 0.6% while VTI is down 3%. That divergence reflects AVUS’s lighter exposure to the highest-valuation mega-cap technology names. Information Technology is AVUS’s largest sector at 22.6%, compared to VTI’s 31.8% tech weighting. When richly valued tech names pull back, AVUS tends to hold up better.

Three Tradeoffs Worth Understanding

1. Factor timing risk: Value and profitability factors don’t outperform every year. Between 2017 and 2020, growth-heavy index funds crushed factor-tilted strategies for extended stretches. Investors holding AVUS need conviction in the long-term thesis, because there will be periods where a plain index fund looks smarter.
2. Still meaningfully concentrated at the top: Despite the factor tilt, Microsoft, Nvidia, and Apple together represent roughly 13% of the portfolio. The fund is genuinely diversified across 500-plus positions, but the top of the book still carries significant single-stock weight.
3. Modest income, not an income strategy: The dividend yield is about 1%. With the 10-year Treasury yielding 4.4%, investors who need current income have better options. AVUS is a total-return vehicle, not an income sleeve.

AVUS is designed as a domestic equity core for long-term investors who want broad U.S. market exposure with a systematic tilt toward quality and value. Anyone expecting it to behave like a pure index fund in every market environment will occasionally be surprised by the divergence.