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Is American Century U.S. Quality Value ETF (VALQ) a Strong ETF Right Now?
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Launched on 01/11/2018, the American Century U.S. Quality Value ETF (VALQ - Free Report) is a smart beta exchange traded fund offering broad exposure to the Style Box - All Cap Value category of the market.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
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.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
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
The fund is sponsored by American Century Investments. It has amassed assets over $235.21 million, making it one of the larger ETFs in the Style Box - All Cap Value. Before fees and expenses, VALQ 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.
Operating expenses on an annual basis are 0.29% for this ETF, which makes it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 1.47%.
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.
This ETF has heaviest allocation in the Information Technology sector - about 23.30% of the portfolio. Industrials and Consumer Staples round out the top three.
Looking at individual holdings, Walmart Inc Common Stock Usd.1 (WMT - Free Report) accounts for about 2.86% of total assets, followed by Te Connectivity Ltd Common Stock Chf.57 (TEL - Free Report) and Mckesson Corp Common Stock Usd.01 (MCK - Free Report) .
The top 10 holdings account for about 23.36% of total assets under management.
Performance and Risk
So far this year, VALQ has added about 14.41%, and is up roughly 23.81% in the last one year (as of 08/28/2024). During this past 52-week period, the fund has traded between $46.59 and $60.30.
The ETF has a beta of 0.94 and standard deviation of 15.05% for the trailing three-year period. With about 230 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 - 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 $10.57 billion in assets, iShares Core S&P U.S. Value ETF has $18.91 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?
Launched on 01/11/2018, the American Century U.S. Quality Value ETF (VALQ - Free Report) is a smart beta exchange traded fund offering broad exposure to the Style Box - All Cap Value category of the market.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
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.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
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
The fund is sponsored by American Century Investments. It has amassed assets over $235.21 million, making it one of the larger ETFs in the Style Box - All Cap Value. Before fees and expenses, VALQ 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.
Operating expenses on an annual basis are 0.29% for this ETF, which makes it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 1.47%.
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.
This ETF has heaviest allocation in the Information Technology sector - about 23.30% of the portfolio. Industrials and Consumer Staples round out the top three.
Looking at individual holdings, Walmart Inc Common Stock Usd.1 (WMT - Free Report) accounts for about 2.86% of total assets, followed by Te Connectivity Ltd Common Stock Chf.57 (TEL - Free Report) and Mckesson Corp Common Stock Usd.01 (MCK - Free Report) .
The top 10 holdings account for about 23.36% of total assets under management.
Performance and Risk
So far this year, VALQ has added about 14.41%, and is up roughly 23.81% in the last one year (as of 08/28/2024). During this past 52-week period, the fund has traded between $46.59 and $60.30.
The ETF has a beta of 0.94 and standard deviation of 15.05% for the trailing three-year period. With about 230 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 - 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 $10.57 billion in assets, iShares Core S&P U.S. Value ETF has $18.91 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.