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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 long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
Managed by American Century Investments, VALQ has amassed assets over $207.65 million, making it one of the larger 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
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 0.29%, making it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 2.11%.
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.
For VALQ, it has heaviest allocation in the Information Technology sector --about 17.50% of the portfolio --while Healthcare and Industrials round out the top three.
Taking into account 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) .
The top 10 holdings account for about 21.21% of total assets under management.
Performance and Risk
Year-to-date, the American Century U.S. Quality Value ETF return is roughly 5.49% so far, and is up about 15.25% over the last 12 months (as of 10/18/2023). VALQ has traded between $43.74 and $50.93 in this past 52-week period.
The fund has a beta of 0.94 and standard deviation of 15.70% 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) 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 $8.25 billion in assets, iShares Core S&P U.S. Value ETF has $13.53 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 long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
Managed by American Century Investments, VALQ has amassed assets over $207.65 million, making it one of the larger 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
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 0.29%, making it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 2.11%.
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.
For VALQ, it has heaviest allocation in the Information Technology sector --about 17.50% of the portfolio --while Healthcare and Industrials round out the top three.
Taking into account 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) .
The top 10 holdings account for about 21.21% of total assets under management.
Performance and Risk
Year-to-date, the American Century U.S. Quality Value ETF return is roughly 5.49% so far, and is up about 15.25% over the last 12 months (as of 10/18/2023). VALQ has traded between $43.74 and $50.93 in this past 52-week period.
The fund has a beta of 0.94 and standard deviation of 15.70% 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) 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 $8.25 billion in assets, iShares Core S&P U.S. Value ETF has $13.53 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.