Should the Fidelity Value Factor ETF (FVAL) be on your investing radar?

Launched on September 12, 2016, the Fidelity Value Factor ETF (FVAL) is a passively managed exchange-traded fund designed to provide broad exposure to the large-cap value segment of the U.S. equity market.

The fund is sponsored by Fidelity. It has over $934.19 million in assets, making it one of the average-sized ETFs trying to compete with the large-cap value segment of the US stock market.

Large-cap companies typically have a market capitalization of over $10 billion. Large-cap companies are considered a more stable option and have more predictable cash flows and are less volatile than their mid- and small-cap counterparts.

Value stocks have below-average price-to-earnings and price-to-book ratios. They also have below-average sales and profit growth rates. Looking at their long-term performance, value stocks have outperformed growth stocks in almost all markets. However, they are likely to underperform growth stocks in strong bull markets.

Expense ratios are an important factor in an ETF's returns, and in the long run, cheaper funds can significantly outperform their more expensive counterparts, other things being equal.

The annual operating costs for this ETF are 0.15%, making it one of the cheapest products in this space.

The trailing 12-month dividend yield is 1.62%.

Even though ETFs offer diversified exposure that minimizes individual stock risk, it's still important to take a look at a fund's holdings before investing. Fortunately, most ETFs are very transparent products that disclose their holdings on a daily basis.

This ETF has the largest allocation to the information technology sector – approximately 29.80% of the portfolio. Finance and healthcare round out the top three.

Looking at individual holdings, Apple Inc (AAPL) accounts for about 6.97% of total assets, followed by Microsoft Corp (MSFT) and Nvidia Corp (NVDA).

The top 10 holdings account for approximately 37.06% of total assets under management.

FVAL aims to match the performance of the Fidelity US Value Factor Index, before fees and expenses. The Fidelity US Value Factor Index reflects the performance of stocks of large and mid-sized US companies with attractive valuations.

The ETF has gained around 16.96% so far this year and has risen around 28.66% over the last year (as of November 6, 2024). Over the last 52 weeks, the price has traded between $47.89 and $61.98.

The ETF has a beta of 1.02 and a standard deviation of 17.06% for the most recent three-year period. With around 131 investments, it ensures that company-specific risks are effectively spread.

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