The American Century U.S. Quality Value ETF (VALQ) is drawing investor interest as a tool for portfolio diversification during a period marked by raised market valuations and shifting investor priorities. As equities in early-stage AI sectors remain plentiful, financial advisors and investors are assessing whether value-oriented stocks can serve as a protective measure against potential market downturns.
VALQ focuses on large-cap stocks that appear undervalued while prioritizing quality and income generation. Through March, the fund has returned 9.2% year-to-date, surpassing the ETF Database Large Cap Value Equities benchmark average of 6.89% over the past five years. Its selection process evaluates core metrics such as profitability margins, debt ratios, and cash flow stability, deliberately excluding overpriced megacap technology stocks that dominate growth-focused indexes.
The fund’s dual emphasis on value and sustainable income distinguishes it from peers. By integrating these criteria, VALQ seeks to uncover companies positioned for steady performance without overreliance on speculative growth narratives. Among its top holdings is Merck & Co (MRK), which has climbed 38.5% year-to-date, illustrating how health care stocks within the portfolio deliver gains without heavy exposure to tech-driven volatility.
One persistent market concern is sector concentration, particularly the outsized influence of AI-related equities on overall returns. VALQ mitigates this risk by spreading investments across undervalued firms in industrials, financial services, and consumer staples. The fund’s expense ratio of 29 basis points aligns with industry standards, though investors should recognize that its index provider, VettaFi LLC, collects separate licensing fees independent of the ETF’s performance.
VALQ’s outperformance raises questions about its ability to maintain gains if AI-driven growth continues to dominate market movements. Its historical performance during past periods of valuation divergence—particularly when growth and value stocks diverged sharply, will be critical in determining whether it can replicate success in the current environment.
VALQ holds major health care names like Merck & Co (MRK), which has returned 38.5% YTD. Names like those offer plenty of upside, clearly, without adding too much more tech exposure. Together, names like those in the quality value ETF could make it a strong option to watch. For those looking at ways to diversify and broaden their portfolios, VALQ could be one to watch.
For more news, information, and analysis, visit the Core Strategies Content Hub. 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.
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