Should the Fidelity Value Factor ETF (FVAL) be on your investment radar?

On By Littum

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

The fund is sponsored by Fidelity. It has accumulated assets over $934.19 million, making it one of the average ETFs trying to match the Large Cap Value segment of the US stock market.

Large cap companies usually have a market capitalization of over $10 billion. Considered a more stable solution, large companies boast more predictable cash flows and are less volatile than their mid- and small-cap counterparts.

Value stocks have lower than average price-to-earnings and price-to-book ratios. They also have lower than average sales and earnings growth rates. Looking at their long-term performance, value stocks have outperformed growth stocks in almost every market. However, they are likely to underperform growth stocks in strong bull markets.

Expense ratios are an important factor in the return of an ETF, and over the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining the same.

Annual operating expenses for this ETF are 0.15%, making it one of the cheapest products in the space.

It has a trailing 12-month yield of 1.62%.

Although ETFs offer diversified exposure that minimizes the risk of individual stocks, it’s still important to research a fund’s holdings before investing. Fortunately, most ETFs are highly transparent products that disclose their holdings on a daily basis.

This ETF has the largest allocation to the information technology sector – about 29.80% of the portfolio. Economics and healthcare round out the top three.

Looking at individual holdings, Apple Inc ( AAPL ) accounts for about 6.97% of total assets, followed by Microsoft Corp ( MSFT ) and Nvidia Corp ( NVDA ).

The top 10 holdings account for about 37.06% of total assets under management.

FVAL seeks to match the performance of the Fidelity US Value Factor Index before fees and expenses. The Fidelity US Value Factor Index reflects the performance of stocks in large and mid-sized US companies that have attractive valuations.

The ETF is up about 16.96% so far this year and is up about 28.66% in the last year (as of 11/06/2024). In the past 52-week period, it has traded between $47.89 and $61.98.

The ETF has a beta of 1.02 and a standard deviation of 17.06% for the trailing three-year period. With around 131 holdings, it effectively diversifies company-specific risk.