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

Making its debut on 09/12/2016, smart beta exchange traded fund Fidelity Value Factor ETF (FVAL) provides investors broad exposure to the Style Box - Large Cap Value category of the market.

What Are Smart Beta ETFs?

Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.

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.

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.

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

Managed by Fidelity, FVAL has amassed assets over $1.07 billion, making it one of the average sized ETFs in the Style Box - Large Cap Value. Before fees and expenses, FVAL seeks to match the performance of the Fidelity U.S. Value Factor Index.

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

Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.

Annual operating expenses for this ETF are 0.16%, making it one of the least expensive products in the space.

It has a 12-month trailing dividend yield of 1.48%.

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 33.2% of the portfolio. Financials and Consumer Discretionary round out the top three.

Taking into account individual holdings, Nvidia Corp (NVDA) accounts for about 8.03% of the fund's total assets, followed by Apple Inc (AAPL) and Microsoft Corp (MSFT).

Its top 10 holdings account for approximately 40.08% of FVAL's total assets under management.

Performance and Risk

Year-to-date, the Fidelity Value Factor ETF has added about 14.17% so far, and it's up approximately 13% over the last 12 months (as of 11/18/2025). FVAL has traded between $52.80 $71.36 in this past 52-week period.

The ETF has a beta of 0.97 and standard deviation of 14.76% for the trailing three-year period. With about 129 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 $69.6 billion in assets, Vanguard Value ETF has $149.04 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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