What is the VALQ ETF ?
VALQ ETF: Overview
The VALQ ETF, formally known as the American Century U.S. Quality Value ETF, is an investment fund that seeks to provide investors with exposure to a portfolio of undervalued or income-generating large- and mid-cap companies in the United States. The fund is managed by American Century Investment Management, Inc., and it tracks the American Century U.S. Quality Value Index. This rules-based index uses a combination of fundamental measures to identify high-quality, undervalued stocks with sustainable income. As of May 31, 2023, the total market capitalization of the index was approximately $2.8 billion or more.
VALQ ETF Underlying and Exposure: What does it track and how?
The underlying index of the VALQ ETF is the American Century U.S. Quality Value Index. To construct this index, a two-step process is followed. Firstly, a quality screen is applied to select financially healthy companies based on various profitability, earnings quality, management quality, leverage, and momentum metrics. Secondly, a valuation score is calculated for the remaining stocks, comparing their attractiveness to peers in the same industry group based on value, earnings yield, and cash flow yield metrics. Additionally, an income screen based on dividend yield is applied to filter out the bottom of the universe of dividend-paying stocks.
The resulting index typically consists of 200-300 large- and mid-cap stocks. The fund aims to invest at least 80% of its assets in the component securities of this underlying index. However, it may use a "representative sampling" strategy when it is impractical or costly to fully replicate the index. This strategy involves investing in a sample of securities that aim to provide a portfolio with a similar investment profile to that of the underlying index.
VALQ overlap What is the VALQ ETF ?
VALQ ETF: Benefits of Investing
The VALQ ETF offers several benefits to investors looking for exposure to quality value stocks in the U.S. market. By targeting undervalued companies with sustainable income, the fund aims to capitalize on potential growth opportunities. Value investing has historically shown resilience in various market conditions, making the ETF suitable for those seeking long-term capital appreciation. Additionally, the fund's rules-based methodology helps maintain a disciplined and transparent investment approach.
Furthermore, the VALQ ETF provides diversification benefits by investing in a wide range of large- and mid-cap stocks. Investors can gain exposure to multiple sectors and industries within the U.S. equity market through this single investment vehicle, potentially reducing individual stock-specific risk.
VALQ ETF: Considerations before Investing
While the VALQ ETF offers attractive features, potential investors should be aware of certain considerations before making an investment decision. As with any investment, there are risks involved. The ETF's performance is subject to market fluctuations, and the value of the fund's assets may decline, leading to a loss of invested capital. Investors should carefully assess their risk tolerance and investment objectives to determine if the VALQ ETF aligns with their overall financial strategy.
Additionally, it is essential to understand the fund's expense ratio and any associated transaction costs. These expenses can impact the overall returns of the investment. Furthermore, investors should review the fund's historical performance and track record to gauge its potential for meeting their investment goals.
Conclusion
The VALQ ETF provides investors with exposure to a diversified portfolio of undervalued and income-generating large- and mid-cap companies in the U.S. equity market. Its rules-based methodology and focus on quality value stocks offer potential opportunities for long-term growth. However, as with any investment, it is crucial for investors to conduct thorough research, consider their financial goals, and assess the fund's suitability based on their risk tolerance and investment horizon.
Disclaimer: This article does not provide any investment advisory services. The information presented here is for educational and informational purposes only. Investors should consult with a qualified financial advisor before making any investment decisions.
Sources:
VALQ ETF issuer
VALQ ETF official page
VALQ quote and analysis
Discover the top holdings, correlations, and overlaps of ETFs using our visualization tool.
Our app allows you to build and track your portfolio.
To learn more about the VALQ American Century STOXX U.S. Quality Value ETF, access our dedicated page now.
FAQ
What is the VALQ ETF?
The VALQ ETF, also known as the Amplify International Online Retail ETF, is an exchange-traded fund that focuses on global equity securities of publicly traded companies with significant revenue from the online retail business.
What does the underlying index of the VALQ ETF aim to measure?
The underlying index of the VALQ ETF aims to measure the performance of global equity securities from companies that derive at least 70% of their revenues or a minimum of $100 billion in annual retail sales from online retail, online travel, or online marketplace activities.
How does the VALQ ETF select its constituents for the underlying index?
The VALQ ETF selects constituents based on their country of domicile, dividing them into U.S.-based companies and international-based companies. Within their respective pools, the index constituents are weighted approximately equally, with at least 75% of the index consisting of U.S.-based companies.
What is the investment approach of the VALQ ETF?
The VALQ ETF follows an indexing investment approach, attempting to replicate, before fees and expenses, the performance of its underlying index, which focuses on companies with significant online retail revenues.
What are the eligibility criteria for companies to be included in the VALQ ETF's underlying index?
To be included in the underlying index, companies must be listed on a regulated stock exchange, exhibit adequate liquidity and accessibility, have a market capitalization of at least $300 million, a minimum price of $5 per share, and a six-month daily average value traded of at least $2 million.