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Is Fidelity Quality Factor ETF (FQAL) a Strong ETF Right Now?
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A smart beta exchange traded fund, the Fidelity Quality Factor ETF (FQAL - Free Report) debuted on 09/12/2016, and offers broad exposure to the Style Box - Large Cap Blend category of the market.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
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.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of 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
The fund is managed by Fidelity. FQAL has been able to amass assets over $1.09 billion, making it one of the larger ETFs in the Style Box - Large Cap Blend. Before fees and expenses, FQAL seeks to match the performance of the Fidelity U.S. Quality Factor Index.
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
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.
Operating expenses on an annual basis are 0.16% for this ETF, which makes it one of the cheaper products in the space.
It's 12-month trailing dividend yield comes in at 1.17%.
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.
Representing 30.20% of the portfolio, the fund has heaviest allocation to the Information Technology sector; Financials and Healthcare round out the top three.
When you look at individual holdings, Apple Inc (AAPL - Free Report) accounts for about 7.46% of the fund's total assets, followed by Nvidia Corp (NVDA - Free Report) and Microsoft Corp (MSFT - Free Report) .
FQAL's top 10 holdings account for about 36.94% of its total assets under management.
Performance and Risk
The ETF has gained about 2.06% and is up roughly 23.16% so far this year and in the past one year (as of 01/21/2025), respectively. FQAL has traded between $54.74 and $68.47 during this last 52-week period.
The fund has a beta of 0.98 and standard deviation of 16.98% for the trailing three-year period. With about 131 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 $600.68 billion in assets, SPDR S&P 500 ETF has $633.78 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?
A smart beta exchange traded fund, the Fidelity Quality Factor ETF (FQAL - Free Report) debuted on 09/12/2016, and offers broad exposure to the Style Box - Large Cap Blend category of the market.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
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.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of 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
The fund is managed by Fidelity. FQAL has been able to amass assets over $1.09 billion, making it one of the larger ETFs in the Style Box - Large Cap Blend. Before fees and expenses, FQAL seeks to match the performance of the Fidelity U.S. Quality Factor Index.
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
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.
Operating expenses on an annual basis are 0.16% for this ETF, which makes it one of the cheaper products in the space.
It's 12-month trailing dividend yield comes in at 1.17%.
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.
Representing 30.20% of the portfolio, the fund has heaviest allocation to the Information Technology sector; Financials and Healthcare round out the top three.
When you look at individual holdings, Apple Inc (AAPL - Free Report) accounts for about 7.46% of the fund's total assets, followed by Nvidia Corp (NVDA - Free Report) and Microsoft Corp (MSFT - Free Report) .
FQAL's top 10 holdings account for about 36.94% of its total assets under management.
Performance and Risk
The ETF has gained about 2.06% and is up roughly 23.16% so far this year and in the past one year (as of 01/21/2025), respectively. FQAL has traded between $54.74 and $68.47 during this last 52-week period.
The fund has a beta of 0.98 and standard deviation of 16.98% for the trailing three-year period. With about 131 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 $600.68 billion in assets, SPDR S&P 500 ETF has $633.78 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.