Should Fidelity Value Factor ETF (FVAL) Be on Your Investing Radar?

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

The fund is sponsored by Fidelity. It has amassed assets over $942.10 million, making it one of the average sized ETFs attempting to match the Large Cap Value segment of the US equity market.

Why Large Cap Value

Companies that fall in the large cap category tend to have a market capitalization above $10 billion. They tend to be stable companies with predictable cash flows and are usually less volatile than mid and small cap companies.

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. When you look at long-term performance, value stocks have outperformed growth stocks in nearly all markets. But in strong bull markets, growth stocks are more likely to be winners.

Costs

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

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

It has a 12-month trailing dividend yield of 1.65%.

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.

This ETF has heaviest allocation to the Information Technology sector--about 30% of the portfolio. Financials and Consumer Discretionary round out the top three.

Looking at individual holdings, Apple Inc (AAPL) accounts for about 7.08% of total assets, followed by Microsoft Corp (MSFT) and Nvidia Corp (NVDA).

The top 10 holdings account for about 35.93% of total assets under management.

Performance and Risk

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.

The ETF has added about 0.12% so far this year and was up about 9.97% in the last one year (as of 05/14/2025). In the past 52-week period, it has traded between $52.80 and $65.

The ETF has a beta of 0.96 and standard deviation of 17.70% for the trailing three-year period. With about 131 holdings, it effectively diversifies company-specific risk.

Alternatives

Fidelity Value Factor ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, FVAL is an excellent option for investors seeking exposure to the Style Box - Large Cap Value segment of the market. There are other additional ETFs in the space that investors could consider as well.

The Schwab U.S. Dividend Equity ETF (SCHD) and the Vanguard Value ETF (VTV) track a similar index. While Schwab U.S. Dividend Equity ETF has $68.57 billion in assets, Vanguard Value ETF has $133.31 billion. SCHD has an expense ratio of 0.06% and VTV charges 0.04%.

Bottom-Line

Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors.

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

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