Is American Century U.S. Quality Value ETF (VALQ) a Strong ETF Right Now?

The American Century U.S. Quality Value ETF (VALQ), a smart beta fund launched in 2018, targets undervalued or sustainable income large and mid-cap companies within the All Cap Value segment. Managing $254.75 million with a 0.29% expense ratio, VALQ has delivered a 7.98% return year-to-date and over the past year (as of 09/16/2025), exhibiting a beta of 0.89. Its portfolio is concentrated in Information Technology (25.4%), with Johnson & Johnson as its largest holding, but it competes with significantly larger and lower-cost alternatives such as the Fidelity High Dividend ETF (FDVV) and iShares Core S&P U.S. Value ETF (IUSV).

Analysis

The American Century U.S. Quality Value ETF (VALQ) is a smart beta fund offering exposure to large and mid-cap U.S. companies selected for quality and value characteristics. The fund has delivered a respectable 7.98% return year-to-date and over the past year (as of 09/16/2025), coupled with a below-market beta of 0.89, suggesting a relatively conservative risk profile. A key distinguishing feature is its portfolio composition; despite its value mandate, its largest sector allocation is Information Technology at 25.4%, indicating a modern interpretation of the value factor. While the fund is diversified across approximately 232 holdings, its primary challenge lies in its competitive positioning. With $254.75 million in assets and an expense ratio of 0.29%, VALQ is significantly smaller and more expensive than key alternatives like the iShares Core S&P U.S. Value ETF (IUSV), which has $22.1 billion in assets and a 0.04% expense ratio, and the Fidelity High Dividend ETF (FDVV), with $6.89 billion in assets and a 0.16% expense ratio. This cost disadvantage is a critical consideration for long-term, cost-sensitive investors.

Key Decisions for Investors

• Investors should weigh if VALQ's specific quality-value strategy, with its heavy 25.4% weighting in technology, justifies an expense ratio of 0.29% when significantly cheaper and larger value ETFs exist.
• Before allocating capital, it is critical to benchmark VALQ's performance and risk profile against lower-cost competitors like IUSV and FDVV to determine if its smart beta approach provides a tangible advantage over traditional value indexing.
• Given its niche strategy and higher relative fees, VALQ may be better suited as a satellite holding to achieve a specific factor tilt rather than as a core allocation for broad U.S. value exposure.