The American Century U.S. Quality Value ETF (VALQ) made its debut on 01/11/2018, and is a smart beta exchange traded fund that provides broad exposure to the Style Box - All Cap Value category of the market.
What Are Smart Beta ETFs?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader 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.
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.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
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
The fund is managed by American Century Investments. VALQ has been able to amass assets over $336.65 million, making it one of the larger ETFs in the Style Box - All Cap Value. VALQ seeks to match the performance of the AMERICAN CENTURY U.S. QUALITY VALUE INDX before fees and expenses.
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
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
Annual operating expenses for VALQ are 0.29%, which makes it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 1.76%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
VALQ's heaviest allocation is in the Information Technology sector, which is about 33.2% of the portfolio. Its Industrials and Healthcare round out the top three.
Looking at individual holdings, Bristol Myers Squibb Co Common Stock Usd.1 (BMY) accounts for about 2.44% of total assets, followed by Merck + Co. Inc. Common Stock Usd.5 (MRK) and Lockheed Martin Corp Common Stock Usd1.0 (LMT).
Its top 10 holdings account for approximately 21.82% of VALQ's total assets under management.
Performance and Risk
Year-to-date, the American Century U.S. Quality Value ETF return is roughly 8.78% so far, and is up about 17.34% over the last 12 months (as of 08/07/2026). VALQ has traded between $62.12 $71.86 in this past 52-week period.
VALQ has a beta of 0.81 and standard deviation of 12.49% for the trailing three-year period. With about 224 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.
Fidelity High Dividend ETF (FDVV) tracks Fidelity Core Dividend Index and the iShares Core S&P U.S. Value ETF (IUSV) tracks S&P 900 Value Index. Fidelity High Dividend ETF has $10.34 billion in assets, iShares Core S&P U.S. Value ETF has $27.55 billion. FDVV has an expense ratio of 0.15% and IUSV changes 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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American Century U.S. Quality Value ETF (VALQ): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).
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