Avantis Responsible U.S. Equity ETF (AVSU)

The Avantis Responsible U.S. Equity ETF (AVSU) holds shares in hundreds of U.S. companies that pass an environmental, social, and governance screening. It is not a pure ESG fund that avoids entire industries like oil and gas. Instead, it filters for companies within those industries that score higher on responsible business practices, then applies a value overlay to pick stocks trading at cheaper prices relative to their earnings or assets.

What ESG screening actually does

ESG stands for Environmental, Social, and Governance — three categories that measure how a company treats the planet, its people, and its shareholders. Environmental factors include emissions, water use, and waste. Social factors cover labour practices, diversity, community relations, and supply-chain safety. Governance factors look at board independence, executive pay, and shareholder protections.

AVSU uses these metrics to exclude or downweight companies that score poorly. A coal producer might stay in the fund if it scores well on labour practices and governance, but a company with environmental damage and weak board oversight would get screened out. This is not a moral statement — it is a practical bet that companies with stronger ESG practices face lower risks from regulation, litigation, and reputational damage, and so tend to be better long-term investments.

The value overlay and why it matters

Once the screening is done, AVSU applies what is called a value tilt. This means the fund favours stocks trading at low prices relative to their earnings, book value, or sales. A responsible company is more interesting to AVSU if the market is currently undervaluing it. This factor tilt is the bridge between ESG and performance: while ESG screening alone might not beat the market, the value tilt has a strong historical track record of capturing returns over time.

The combination means AVSU can hold companies in old-line industries like banking or manufacturing if they pass the ESG filter and trade cheaply. This makes the fund less volatile than a pure ESG fund that would exclude entire sectors outright.

Holdings and composition

AVSU holds roughly 500 U.S. companies across all major sectors. The largest holdings typically include financial services, technology, industrials, and healthcare companies — the same rough mix as the broader U.S. stock market, but skewed toward the cheaper and more responsible within each category. Turnover is moderate, as American Century’s managers rebalance quarterly to maintain the value characteristics.

The fund is diversified across company sizes. It includes large-cap names familiar to most investors, mid-cap companies that are widely followed but less dominant, and smaller large-caps that the value tilt can illuminate. This range delivers broad U.S. market exposure without being a pure market-weighted index.

Costs and how it trades

The expense ratio is around 0.20% annually — a small fee that reflects the cost of the ESG screening and value-factor analysis but remains competitive compared to both active managers and more specialist ESG-only funds. The fund trades on NASDAQ with solid daily volume and tight spreads, making it straightforward to buy and sell in almost any size.

AVSU reinvests dividends automatically unless an investor chooses otherwise, so the fund compounds its holdings’ income without additional action. The tax efficiency is reasonable for an actively managed equity fund, though it is not as tax-optimized as pure passive index funds.

Who AVSU is for

This fund appeals to investors who want U.S. stock market exposure but prefer to avoid companies with poor environmental, social, or governance practices. It also attracts value-focused investors who like the historical performance of cheaper stocks but want to pair that with a responsible-business filter. Some pension funds and institutional investors use AVSU as a core U.S. equity holding to align their portfolio with sustainability goals without sacrificing expected returns.

Researching AVSU

Start with the fund’s prospectus and ESG methodology document on American Century’s website. These explain exactly which companies the fund excludes, how the ESG scores are calculated, and how the value tilt functions. Compare the fund’s performance to the Russell 1000 Value Index (a broad U.S. value benchmark) and to other ESG-focused equity funds to see whether the combination of screening and value selection is paying off.

Watch the fund’s ESG ratings and sector weights over time. If the fund’s ESG scores begin to drift lower, it may signal that the screening is weakening. If the value tilt becomes extreme — an unusually high concentration of deeply depressed stocks — that could indicate the fund is taking on hidden risks in the name of capturing value. A yearly review of the fund’s largest holdings shows which companies AVSU is betting on and whether they align with your own ESG priorities.