Engineered Wood Products Market Forecast Growth

Navigating small caps can be tricky; it’s not always easy to find the pockets that harbor growth potential in companies that aren’t industry giants. Through the use of active management, American Century Investments is able to offer the Avantis US Small Cap Value ETF (AVUV)who is looking for these opportunities, and investors are taking note.

Engineered wood products are an area that is poised for growth in the future. ReportLinker published the global engineered wood products market 2021-2025, outlook and forecast for the space over the next four years, and found that a compound annual growth rate of 6% was expected.

The analysis predicts an increase in residential and commercial construction overall as well as a greater use of engineered wood in construction as opposed to sawn wood.

The report was an analysis of the industry on a global scale and included a detailed overview of the market as a whole and in different categories, as well as earnings and financial metrics for the leading vendors in the space. One such supplier, Louisiana-Pacific Corporation, commonly referred to as LP, is a major supplier of engineered wood products in the United States.

LP reported net revenue of $1.3 billion in its latest earnings call, an increase of 142% for the period ending June 30.e, according to their website. For the first six months of the year, sales increased by $1.2 billion over last year, or a total of $2.3 billion, reflecting an increase of 107%.

AVUV captures small cap growth

American Century Investments, in partnership with Avantis Investments, offers the Avantis US Small Cap Value ETF (AVUV)an ETF that invests in small cap companies with low valuations but high profitability ratios.

An actively managed ETF, AVUV combines the typical benefits of following an index – diversification, low turnover and transparency of exposures – with the flexibility to capture price movements as they occur, and advisors invest more more because of the methodology, according to American Century.

For benchmarking purposes, the fund uses the Russell 2000 Value Index, which tracks the 2,000 smaller cap stocks of the larger Russell 3000 Index, but the ETF does not replicate this index.

AVUV’s portfolio managers use fundamental screens such as shares outstanding, cash flow, expenses, income, and book value to select stocks. Small companies with high profitability are more heavily weighted than those with lower returns and higher prices.

In addition, AVUV may also invest in derivatives, such as futures, currency forwards and swap agreements to gain equity exposure and manage cash flow.

AVUV invests in Louisiana-Pacific Corporation: LPX is one of the fund’s top 10 holdings with a weighting of 0.74%.

At the end of September, some of the fund’s top sector allocations included financials at 30%, consumer discretionary at 17% and industrials at 17%.

AVUV has an expenditure rate of 0.25%.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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