Yahoo Finance Is American Century U.S. Quality Value ETF (VALQ) a Strong ETF Right Now?
The American Century U.S. Quality Value ETF (VALQ) made its debut on 01/11/2018, and is a smart beta exchange traded fund that provides broad exposure to the Style Box - All Cap Value category of the market.
What Are Smart Beta ETFs?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
The fund is sponsored by American Century Investments. It has amassed assets over $215.27 million, making it one of the larger ETFs in the Style Box - All Cap Value. Before fees and expenses, this particular fund seeks to match the performance of the AMERICAN CENTURY U.S. QUALITY VALUE INDX.
The American Century U.S. Quality Value Index seeks to select securities of large and mid-capitalization companies that are undervalued or have sustainable income.
Cost & Other Expenses
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.
Annual operating expenses for this ETF are 0.29%, making it on par with most peer products in the space.
VALQ's 12-month trailing dividend yield is 1.57%.
Sector Exposure and Top Holdings
ETFs offer diversified exposure and thus minimize single stock risk, but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
VALQ's heaviest allocation is in the Information Technology sector, which is about 22.90% of the portfolio. Its Industrials and Consumer Staples round out the top three.
When you look at individual holdings, Te Connectivity Ltd Common Stock Chf.57 (TEL) accounts for about 2.66% of the fund's total assets, followed by Walmart Inc Common Stock Usd.1 (WMT) and Qualcomm Inc Common Stock Usd.0001 (QCOM).
VALQ's top 10 holdings account for about 23.42% of its total assets under management.
Performance and Risk
So far this year, VALQ return is roughly 7.52%, and is up about 17.43% in the last one year (as of 06/28/2024). During this past 52-week period, the fund has traded between $46.59 and $58.30.
The ETF has a beta of 0.95 and standard deviation of 14.90% for the trailing three-year period. With about 232 holdings, it effectively diversifies company-specific risk.
Alternatives
American Century U.S. Quality Value ETF is an excellent option for investors seeking to outperform the Style Box - All Cap Value segment of the market. There are other ETFs in the space which investors could consider as well.
Dimensional U.S. Targeted Value ETF (DFAT) tracks ---------------------------------------- and the iShares Core S&P U.S. Value ETF (IUSV) tracks S&P 900 Value Index. Dimensional U.S. Targeted Value ETF has $9.62 billion in assets, iShares Core S&P U.S. Value ETF has $17.32 billion. DFAT has an expense ratio of 0.28% and IUSV charges 0.04%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - All Cap Value.
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
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American Century U.S. Quality Value ETF (VALQ): ETF Research Reports
QUALCOMM Incorporated (QCOM) : Free Stock Analysis Report
Walmart Inc. (WMT) : Free Stock Analysis Report
TE Connectivity Ltd. (TEL) : Free Stock Analysis Report
iShares Core S&P U.S. Value ETF (IUSV): ETF Research Reports
Dimensional U.S. Targeted Value ETF (DFAT): ETF Research Reports
