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Is American Century U.S. Quality Value ETF (VALQ) a Strong ETF Right Now?
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The American Century U.S. Quality Value ETF (VALQ - Free Report) was launched on 01/11/2018, and is a smart beta exchange traded fund designed to offer broad exposure to the Style Box - All Cap Value category of the market.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
Managed by American Century Investments, VALQ has amassed assets over $209.27 million, making it one of the average sized ETFs in the Style Box - All Cap Value. This particular fund, before fees and expenses, 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
Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.
Annual operating expenses for this ETF are 0.29%, making it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 1.76%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
VALQ's heaviest allocation is in the Information Technology sector, which is about 26.60% of the portfolio. Its Industrials and Healthcare round out the top three.
When you look at individual holdings, Apple Inc Common Stock Usd.00001 (AAPL - Free Report) accounts for about 2.56% of the fund's total assets, followed by Johnson + Johnson W/d Common Stock Usd1.0 (JNJ - Free Report) and Gilead Sciences Inc Common Stock Usd.001 (GILD - Free Report) .
Its top 10 holdings account for approximately 21.21% of VALQ's total assets under management.
Performance and Risk
The ETF return is roughly 13.41% and was up about 14.60% so far this year and in the past one year (as of 12/20/2023), respectively. VALQ has traded between $45.72 and $52.98 during this last 52-week period.
The ETF has a beta of 0.94 and standard deviation of 15.39% for the trailing three-year period. With about 225 holdings, it effectively diversifies company-specific risk.
Alternatives
American Century U.S. Quality Value ETF is a reasonable option for investors seeking to outperform the Style Box - All Cap Value segment of the market. However, there are other ETFs in the space which investors could consider.
Dimensional U.S. Targeted Value ETF (DFAT - Free Report) tracks ---------------------------------------- and the iShares Core S&P U.S. Value ETF (IUSV - Free Report) tracks S&P 900 Value Index. Dimensional U.S. Targeted Value ETF has $9.50 billion in assets, iShares Core S&P U.S. Value ETF has $19.71 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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Is American Century U.S. Quality Value ETF (VALQ) a Strong ETF Right Now?
The American Century U.S. Quality Value ETF (VALQ - Free Report) was launched on 01/11/2018, and is a smart beta exchange traded fund designed to offer broad exposure to the Style Box - All Cap Value category of the market.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
Managed by American Century Investments, VALQ has amassed assets over $209.27 million, making it one of the average sized ETFs in the Style Box - All Cap Value. This particular fund, before fees and expenses, 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
Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.
Annual operating expenses for this ETF are 0.29%, making it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 1.76%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
VALQ's heaviest allocation is in the Information Technology sector, which is about 26.60% of the portfolio. Its Industrials and Healthcare round out the top three.
When you look at individual holdings, Apple Inc Common Stock Usd.00001 (AAPL - Free Report) accounts for about 2.56% of the fund's total assets, followed by Johnson + Johnson W/d Common Stock Usd1.0 (JNJ - Free Report) and Gilead Sciences Inc Common Stock Usd.001 (GILD - Free Report) .
Its top 10 holdings account for approximately 21.21% of VALQ's total assets under management.
Performance and Risk
The ETF return is roughly 13.41% and was up about 14.60% so far this year and in the past one year (as of 12/20/2023), respectively. VALQ has traded between $45.72 and $52.98 during this last 52-week period.
The ETF has a beta of 0.94 and standard deviation of 15.39% for the trailing three-year period. With about 225 holdings, it effectively diversifies company-specific risk.
Alternatives
American Century U.S. Quality Value ETF is a reasonable option for investors seeking to outperform the Style Box - All Cap Value segment of the market. However, there are other ETFs in the space which investors could consider.
Dimensional U.S. Targeted Value ETF (DFAT - Free Report) tracks ---------------------------------------- and the iShares Core S&P U.S. Value ETF (IUSV - Free Report) tracks S&P 900 Value Index. Dimensional U.S. Targeted Value ETF has $9.50 billion in assets, iShares Core S&P U.S. Value ETF has $19.71 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.