If you're interested in broad exposure to the Large Cap Value segment of the US equity market, look no further than the Fidelity Value Factor ETF (FVAL Quick QuoteFVAL - Free Report) , a passively managed exchange traded fund launched on 09/12/2016.

The fund is sponsored by Fidelity. It has amassed assets over $834.64 million, making it one of the average sized ETFs attempting to match the Large Cap Value segment of the US equity market.

Why Large Cap Value

Companies that find themselves in the large cap category typically have a market capitalization above $10 billion. Overall, they are usually a stable option, with less risk and more sure-fire cash flows than mid and small cap companies.

Value stocks are known for their lower than average price-to-earnings and price-to-book ratios, but investors should also note their lower than average sales and earnings growth rates. While value stocks have outperformed growth stocks in nearly all markets when you consider long-term performance, growth stocks are more likely to outpace value stocks in strong bull markets.

Costs

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.

Annual operating expenses for this ETF are 0.15%, making it one of the least expensive products in the space.

It has a 12-month trailing dividend yield of 1.58%.

Sector Exposure and Top Holdings

It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.

This ETF has heaviest allocation to the Information Technology sector--about 28.30% of the portfolio. Financials and Healthcare round out the top three.

Looking at individual holdings, Apple Inc (AAPL Quick QuoteAAPL - Free Report) accounts for about 7.40% of total assets, followed by Microsoft Corp (MSFT Quick QuoteMSFT - Free Report) and Alphabet Inc Cl A (GOOGL Quick QuoteGOOGL - Free Report) .

The top 10 holdings account for about 33.43% of total assets under management.

Performance and Risk

FVAL seeks to match the performance of the Fidelity U.S. Value Factor Index before fees and expenses. The Fidelity U.S. Value Factor Index reflects the performance of stocks of large and mid-capitalization U.S. companies that have attractive valuations.

The ETF has added about 13.43% so far this year and was up about 20.98% in the last one year (as of 09/03/2024). In the past 52-week period, it has traded between $45.72 and $59.92.

The ETF has a beta of 1.02 and standard deviation of 17.12% for the trailing three-year period. With about 131 holdings, it effectively diversifies company-specific risk.

Alternatives

Fidelity Value Factor ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, FVAL is a great option for investors seeking exposure to the Style Box - Large Cap Value segment of the market. There are other additional ETFs in the space that investors could consider as well.

The Schwab U.S. Dividend Equity ETF (SCHD Quick QuoteSCHD - Free Report) and the Vanguard Value ETF (VTV Quick QuoteVTV - Free Report) track a similar index. While Schwab U.S. Dividend Equity ETF has $60.40 billion in assets, Vanguard Value ETF has $125.15 billion. SCHD has an expense ratio of 0.06% and VTV charges 0.04%.

Bottom-Line

While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.

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.