Is Fidelity Value Factor ETF (FVAL) a Strong ETF Right Now?

The Fidelity Value Factor ETF (FVAL) was launched on 09/12/2016, and is a smart beta exchange traded fund designed to offer broad exposure to the Style Box - Large 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.

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.

By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.

Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.

Fund Sponsor & Index

The fund is managed by Fidelity. FVAL has been able to amass assets over $977.06 million, making it one of the average sized ETFs in the Style Box - Large Cap Value. FVAL seeks to match the performance of the Fidelity U.S. Value Factor Index before fees and expenses.

The Fidelity U.S. Value Factor Index reflects the performance of stocks of large and mid-capitalization U.S. companies that have attractive valuations.

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 this ETF are 0.16%, making it one of the cheaper products in the space.

It's 12-month trailing dividend yield comes in at 1.55%.

Sector Exposure and Top Holdings

While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.

FVAL's heaviest allocation is in the Information Technology sector, which is about 32.1% of the portfolio. Its Financials and Consumer Discretionary round out the top three.

Looking at individual holdings, Microsoft Corp (MSFT) accounts for about 7.22% of total assets, followed by Nvidia Corp (NVDA) and Apple Inc (AAPL).

FVAL's top 10 holdings account for about 38.51% of its total assets under management.

Performance and Risk

The ETF return is roughly 5.29% and is up roughly 8.92% so far this year and in the past one year (as of 07/17/2025), respectively. FVAL has traded between $52.80 and $65.00 during this last 52-week period.

The ETF has a beta of 0.96 and standard deviation of 16.58% for the trailing three-year period. With about 130 holdings, it effectively diversifies company-specific risk .

Alternatives

Fidelity Value Factor ETF is a reasonable option for investors seeking to outperform the Style Box - Large Cap Value segment of the market. However, there are other ETFs in the space which investors could consider.

Schwab U.S. Dividend Equity ETF (SCHD) tracks Dow Jones U.S. Dividend 100 Index and the Vanguard Value ETF (VTV) tracks CRSP U.S. Large Cap Value Index. Schwab U.S. Dividend Equity ETF has $70.27 billion in assets, Vanguard Value ETF has $138.73 billion. SCHD has an expense ratio of 0.06% and VTV 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 - Large Cap Value

Bottom Line

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This article originally published on Zacks Investment Research (zacks.com).

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