Launched on 09/12/2016, the Fidelity Value Factor ETF (FVAL Quick QuoteFVAL - Free Report) is a passively managed exchange traded fund designed to provide a broad exposure to the Large Cap Value segment of the US equity market.

The fund is sponsored by Fidelity. It has amassed assets over $964.59 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 fall in the large cap category tend to 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.

Carrying lower than average price-to-earnings and price-to-book ratios, value stocks also have lower than average sales and earnings growth rates. When you look at long-term performance, value stocks have outperformed growth stocks in nearly all markets. But in strong bull markets, growth stocks are more likely to be winners.

Costs

Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.

Annual operating expenses for this ETF are 0.16%, making it one of the cheaper products in the space.

It has a 12-month trailing dividend yield of 1.65%.

Sector Exposure and Top Holdings

Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, 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 28.20% 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 6.77% of total assets, followed by Nvidia Corp (NVDA Quick QuoteNVDA - Free Report) and Microsoft Corp (MSFT Quick QuoteMSFT - Free Report) .

The top 10 holdings account for about 38.12% 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 lost about -3.19% so far this year and is up roughly 8.34% in the last one year (as of 03/13/2025). In the past 52-week period, it has traded between $54.50 and $65.

The ETF has a beta of 1.01 and standard deviation of 16.55% for the trailing three-year period. With about 131 holdings, it effectively diversifies company-specific risk.

Alternatives

Fidelity Value Factor ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, FVAL is a reasonable option for those seeking exposure to the Style Box - Large Cap Value area of the market. Investors might also want to consider some other ETF options in the space.

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 $68.25 billion in assets, Vanguard Value ETF has $130.91 billion. SCHD has an expense ratio of 0.06% and VTV charges 0.04%.

Bottom-Line

Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also excellent vehicles for long term investors.

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.