The American Century U.S. Quality Value ETF (VALQ) was launched on 01/11/2018, and is a smart beta exchange traded fund designed to offer 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.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
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.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
The fund is managed by American Century Investments, and has been able to amass over $327.83 million, which makes 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
Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.
Operating expenses on an annual basis are 0.29% for this ETF, which makes it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 1.73%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Information Technology sector - about 25.4% of the portfolio. Healthcare and Industrials round out the top three.
Looking at individual holdings, Bristol Myers Squibb Co Common Stock Usd.1 (BMY) accounts for about 2.78% of total assets, followed by Merck + Co. Inc. Common Stock Usd.5 (MRK) and Unitedhealth Group Inc Common Stock Usd.01 (UNH).
Its top 10 holdings account for approximately 23.8% of VALQ's total assets under management.
Performance and Risk
The ETF has added roughly 7.02% and was up about 10.23% so far this year and in the past one year (as of 10/08/2026), respectively. VALQ has traded between $62.30 and $72.78 during this last 52-week period.
VALQ has a beta of 0.81 and standard deviation of 12.40% for the trailing three-year period. With about 226 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 $10.26 billion in assets, iShares Core S&P U.S. Value ETF has $27.35 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
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American Century U.S. Quality Value ETF (VALQ): ETF Research Reports
This article originally published on Zacks Investment Research (zacks.com).