[SINGAPORE] A US-based exchange-traded fund (ETF) has recently become a substantial shareholder of Rex International after raising its stake in the oil exploration and production company.
Avantis International Small Cap Value ETF (AVDV ETF), an actively managed ETF, in July increased its stake in Rex International to 5.3 per cent, or around 69 million shares.
This crossed the 5 per cent threshold that qualifies substantial shareholders under Singapore law, the Singapore Exchange (SGX) said on Monday (Jul 28).
The fund is managed by American Century Investment and focuses on undervalued small-cap companies with strong fundamentals in non-US developed markets. It has assets under management of close to US$11 billion.
Its year-to-date return, as at Jun 30, is 24.05 per cent, according to its factsheet. That outperformed the S&P 500, which was up 5.48 per cent in the same period.
The bourse operator noted that the fund’s investment in 30 SGX-listed companies, including Rex International, is “a recent milestone (that) underscores growing global interest in Singapore’s capital markets”.
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“This recognition by a US institutional investor reflects the growing visibility and attractiveness of SGX-listed companies on the global stage. It is also a timely reminder that Singapore’s capital market continues to serve as a vital gateway for international exposure, especially for nimble, well-managed small-cap companies,” it said.
The ETF’s SGX-listed stock holdings
Of the SGX stocks in its portfolio, it has the largest exposure to Yangzijiang Financial – the former investment arm of Yangzijiang Shipbuilding that was spun-off from the Chinese vesselmaker in 2022.
The investment management, wealth advisory and fund management company ranks eighth in terms of stock weight in the fund as at Jul 24.
AVDV ETF holds an estimated 2.6 per cent interest in the company – or around 89.6 million shares – which accounted for about 0.6 per cent of the fund’s portfolio.
This was followed by First Resources, which ranks second by stock weight among the SGX-listed stocks in the fund’s portfolio.
The Indonesian palm oil producer accounts for about 0.2 per cent of the ETF’s portfolio. The fund holds around 1 per cent or 15.6 million of its shares.
AVDV ETF owns a 0.1 per cent stake, or around 6.9 million shares, in Keppel Infrastructure Trust, which occupies 0.02 per cent of its portfolio.
It also owns 2.3 per cent, or around 21.4 million shares, of construction engineering company Wee Hur, which has a 0.1 per cent stock weight in the ETF.
The AVDV ETF targets companies with low valuations and strong profitability with the aim of boosting expected returns, SGX said.
The portfolio managers evaluate these traits using financial and market data such as shares outstanding, book value, cash flows and accruals, its ETF prospectus indicated.
Value is primarily assessed via the adjusted book-to-price ratio. Profitability is measured by the adjusted cash flow-to-book value ratio, while considering other metrics.
A company’s industry classification, relative performance, liquidity, float and tax or governance considerations, are also taken into account.
Securities that meet the criteria are included in a diversified portfolio. Their weights are based on market capitalisation and are adjusted for value, profitability and performance.
