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Is Fidelity Quality Factor ETF (FQAL) a Strong ETF Right Now?
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The Fidelity Quality Factor ETF (FQAL - Free Report) made its debut on 09/12/2016, and is a smart beta exchange traded fund that provides broad exposure to the Style Box - Large Cap Blend category of the market.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
Managed by Fidelity, FQAL has amassed assets over $746.98 million, making it one of the larger ETFs in the Style Box - Large Cap Blend. This particular fund seeks to match the performance of the Fidelity U.S. Quality Factor Index before fees and expenses.
The Fidelity U.S. Quality Factor Index reflects the performance of stocks of large and mid-capitalization U.S. companies with a higher quality profile than the broader market.
Cost & Other Expenses
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
Operating expenses on an annual basis are 0.15% for this ETF, which makes it one of the cheaper products in the space.
It has a 12-month trailing dividend yield of 1.28%.
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.
Representing 27.70% of the portfolio, the fund has heaviest allocation to the Information Technology sector; Healthcare and Financials round out the top three.
Taking into account individual holdings, Apple Inc (AAPL - Free Report) accounts for about 7.53% of the fund's total assets, followed by Microsoft Corp (MSFT - Free Report) and Alphabet Inc Cl A (GOOGL - Free Report) .
The top 10 holdings account for about 31.71% of total assets under management.
Performance and Risk
Year-to-date, the Fidelity Quality Factor ETF return is roughly 5.74% so far, and was up about 29.49% over the last 12 months (as of 03/12/2024). FQAL has traded between $44.73 and $57.94 in this past 52-week period.
FQAL has a beta of 0.98 and standard deviation of 16.97% for the trailing three-year period. With about 133 holdings, it effectively diversifies company-specific risk.
Alternatives
Fidelity Quality Factor ETF is a reasonable option for investors seeking to outperform the Style Box - Large Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.
IShares Core S&P 500 ETF (IVV - Free Report) tracks S&P 500 Index and the SPDR S&P 500 ETF (SPY - Free Report) tracks S&P 500 Index. IShares Core S&P 500 ETF has $448.91 billion in assets, SPDR S&P 500 ETF has $503.24 billion. IVV has an expense ratio of 0.03% and SPY charges 0.09%.
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 - Large Cap Blend.
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 Fidelity Quality Factor ETF (FQAL) a Strong ETF Right Now?
The Fidelity Quality Factor ETF (FQAL - Free Report) made its debut on 09/12/2016, and is a smart beta exchange traded fund that provides broad exposure to the Style Box - Large Cap Blend category of the market.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
Managed by Fidelity, FQAL has amassed assets over $746.98 million, making it one of the larger ETFs in the Style Box - Large Cap Blend. This particular fund seeks to match the performance of the Fidelity U.S. Quality Factor Index before fees and expenses.
The Fidelity U.S. Quality Factor Index reflects the performance of stocks of large and mid-capitalization U.S. companies with a higher quality profile than the broader market.
Cost & Other Expenses
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
Operating expenses on an annual basis are 0.15% for this ETF, which makes it one of the cheaper products in the space.
It has a 12-month trailing dividend yield of 1.28%.
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.
Representing 27.70% of the portfolio, the fund has heaviest allocation to the Information Technology sector; Healthcare and Financials round out the top three.
Taking into account individual holdings, Apple Inc (AAPL - Free Report) accounts for about 7.53% of the fund's total assets, followed by Microsoft Corp (MSFT - Free Report) and Alphabet Inc Cl A (GOOGL - Free Report) .
The top 10 holdings account for about 31.71% of total assets under management.
Performance and Risk
Year-to-date, the Fidelity Quality Factor ETF return is roughly 5.74% so far, and was up about 29.49% over the last 12 months (as of 03/12/2024). FQAL has traded between $44.73 and $57.94 in this past 52-week period.
FQAL has a beta of 0.98 and standard deviation of 16.97% for the trailing three-year period. With about 133 holdings, it effectively diversifies company-specific risk.
Alternatives
Fidelity Quality Factor ETF is a reasonable option for investors seeking to outperform the Style Box - Large Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.
IShares Core S&P 500 ETF (IVV - Free Report) tracks S&P 500 Index and the SPDR S&P 500 ETF (SPY - Free Report) tracks S&P 500 Index. IShares Core S&P 500 ETF has $448.91 billion in assets, SPDR S&P 500 ETF has $503.24 billion. IVV has an expense ratio of 0.03% and SPY charges 0.09%.
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 - Large Cap Blend.
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.