Like it or not, the same risks that caused markets to dip so severely a few months ago are still here. In fact, they may be worse. Recent tariff news augurs longer uncertainty for supply chains and trade than some may have expected. Further geopolitical risks could loom. Perhaps most concerning are the deeper-seated risks that investors may not think about every day. Together, those factors could speak to shifting equities investments into quality value ETFs.
See more: Get Quality International Equities Diversification in QINT
Not only do tariffs – which continue to shift almost moment to moment – loom, but deeper issues remain. According to analysis from American Century Investments, investors may want to look to the nation’s growing debt-to-GDP ratio. Moody’s decision to downgrade the U.S. credit rating, for example, may send ripples of uncertainty into bond markets and, in turn, the stock market.
The tech surge that helped markets recover since May, too, deserves scrutiny. Concentration risk continues to loom over the tech space, with just a handful of megacap tech names continuing to drive performance. If part of that performance is coming from overvaluation of A.I., for example, a drop off could loom for many investors’ portfolios.
Quality value ETFs can provide a smart set of solutions to diversify equities slates. Rather than rely entirely on just a few firms or a heavy growth bias, quality value ETFs can help. Here are three that may merit a closer look.
Quality Value ETFs for Rising Risk in 2025
The American Century Focused Large Cap Value ETF (FLV ) could be a standout candidate to watch. The strategy charges a 42 basis point (bps) for its approach, actively investing in large cap firms trading at a discount. Specifically, it looks for high quality companies, considering metrics like cash flows and earnings, assessed via analytical research and techniques. FLV has performed very well with that approach, significantly outperforming its ETF Database Category and Factset Segment averages over five years.
Next, the American Century U.S. Quality Value ETF (VALQ ) could intrigue among quality value ETFs. VALQ charges a 29 bps fee to track the American Century U.S. Quality Value Index. In doing so, it screens for stocks with stronger financial fundamentals than rivals. Intriguingly, it also aims to combine value stocks with equities, providing a degree of current income. That has helped it return 12.6% over five years, beating its averages in that time per ETF Database data.
Finally, the Avantis U.S. Large Cap Value ETF (AVLV ) deserves attention. AVLV charges a 15 bps fee to actively invest in large cap value stocks meeting fundamental standards. Specifically, its managers actively scrutinize firms for shares outstanding and price-to-book value. The strategy has returned 9.6% over the last three months, beating its averages in that time.
Together, the trio of quality value ETFs may help portfolios diversify away from major risks. Looking ahead, value stocks could potentially be poised for a strong end to 2025 and start to 2026.
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VettaFi LLC (“VettaFi”) is the index provider for VALQ, for which it receives an index licensing fee. However, VALQ is not issued, sponsored, endorsed, or sold by VettaFi, and VettaFi has no obligation or liability in connection with the issuance, administration, marketing, or trading of VALQ.
