Value investing could be one of the areas poised for success amid rising global volatility. The value ETF landscape offers myriad opportunities and varied options to get that value exposure. A quality view within a value ETF could prove to be a shrewd take on the category, with VALQ a standout therein. The fund’s index recently made some changes that may signal how its operators are looking at markets in the medium term.
See more: This Quality Growth ETF Just Rebalanced: See What Rose & Fell
The American Century U.S. Quality Value ETF (VALQ ) launched back in 2018. The strategy charges a 29 basis point (bps) fee to track the American Century U.S. Quality Value Index. The fund has outperformed over the long term, with its 9.7% return beating the five year ETF Database large cap value equities category average. Additionally, the index screens stocks for quality, value, and income. It aims to craft a mix of stocks producing income and offering significant value opportunities.
Value ETF VALQ Rebalances: What's Up and What's Down
How, then, did the index change at the end of February? The index, ACVALQ, increased five stock weights and decreased five other stock weights. It did not drop or add new constituents. United Parcel Service, Inc. (UPS) saw the biggest increase in weight, up 1.44% in weight from just a 0.18% weight. Two other sub 0.50% weight stocks, Paychex (PAYX) and Altria Group (MO), also grew above 1% to 1.5% and 1.25%, respectively.
In terms of decreases, the value ETF dropped Goldman Sachs Group (GS) from 1.59% to just 0.17%, the largest decrease in its rebalance. The ETF’s index operators also dropped Alphabet, Inc. (GOOGL) by just one percentage point less than it did (GS). GOOGL went from a 1.53% weight to just 0.13% in the rebalance. Four of the five that decreased in weight dropped to a 0.25% weight or less, with Honeywell International (HON) and Walmart Inc. (WMT) also down.
Looking ahead, the quality value ETF’s decrease in exposure to big tech and some consumer discretionary could signal concern about broader economic conditions. For those looking at value ETF options available to investors, the fund could be one to watch.
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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.
