A smart beta exchange traded fund, the Fidelity Value Factor ETF (FVAL) debuted on 09/12/2016, and offers 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 offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
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.
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
FVAL is managed by Fidelity, and this fund has amassed over $1.05 billion, which makes 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
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.
With one of the cheaper products in the space, this ETF has annual operating expenses of 0.16%.
FVAL's 12-month trailing dividend yield is 1.45%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, 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 31.3% of the portfolio. Financials and Consumer Discretionary round out the top three.
Looking at individual holdings, Nvidia Corp (NVDA) accounts for about 8.79% of total assets, followed by Microsoft Corp (MSFT) and Apple Inc (AAPL).
Its top 10 holdings account for approximately 41.16% of FVAL's total assets under management.
Performance and Risk
So far this year, FVAL has added roughly 12.35%, and was up about 17.25% in the last one year (as of 09/18/2025). During this past 52-week period, the fund has traded between $52.80 and $68.68.
The fund has a beta of 0.97 and standard deviation of 15.87% 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 $71.82 billion in assets, Vanguard Value ETF has $146.48 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
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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Fidelity Value Factor ETF (FVAL): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).
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