VFQY: This Actively Managed ETF Has Lagged Passive Competitors

seekingalpha05-17

John M Lund Photography Inc This article series aims to evaluate ETFs (exchange-traded funds) based on their past performance and portfolio metrics. Reviews with updated data will be posted when ...

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Reviews with updated data will be posted when ...</p>\n\n<a href=\"https://seekingalpha.com/article/4693851-vfqy-this-actively-managed-etf-has-lagged-passive-competitors\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"BK7126","symbol_name":"医疗保健用品","start_time":0,"source_url":"https://seekingalpha.com/article/4693851-vfqy-this-actively-managed-etf-has-lagged-passive-competitors","article_id":"2436704989","we_media_id":null,"thumbnails":["https://static.seekingalpha.com/cdn/s3/uploads/getty_images/56903023/image_56903023.jpg"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2436704989","pubTimestamp":1715883600,"sourceInfo":{"source_id":"seekingalpha_fund","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"John M Lund Photography Inc This article series aims to evaluate ETFs (exchange-traded funds) based on their past performance and portfolio metrics. 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Reviews with updated data will be posted when necessary. VFQY strategy Vanguard U.S. Quality Factor ETF ETF Shares (BATS:VFQY) is an actively managed fund launched on 02/13/2018 with the objective of investing in stocks with strong fundamentals. It has 367 holdings, a dividend yield of 1.64%, and an expense ratio of 0.13%. Dividends are paid quarterly. As described by Vanguard, portfolio managers use a rules-based methodology to screen companies with strong fundamentals and sufficient liquidity. \"Securities with relatively strong fundamentals may be identified by measures such as strong profitability, sustainable earnings, and healthy balance sheets.\" Active management allows a lot of flexibility in the investing process, but it lacks the transparency of an index-based fund. The portfolio turnover rate in the most recent fiscal year was 55%. This article will use as a benchmark Vanguard Total Stock Market Index Fund ETF Shares (VTI). VFQY portfolio The portfolio is invested almost exclusively in U.S. companies, in all size segments. % of asset value by size segment (Chart: author; data: Fidelity) The top 3 sectors are balanced between 20% and 22.3% of asset value: industrials, consumer discretionary and technology. They are followed by financials and healthcare, both close to 12%. Other sectors are below 6%. Compared to the broad market benchmark, VFQY overweights mostly industrials and consumer discretionary. It underweights technology and ignores real estate and utilities. VFQY sector breakdown (chart: author; data: Vanguard) The next table lists the top 10 holdings with fundamental ratios. They represent 16.9% of assets and none of them weigh more than 2%. Therefore, the portfolio is well-diversified and risks related to individual companies are low.   Ticker Name Weight (%) EPS growth %TTM P/E TTM P/E fwd Yield%   AAPL Apple Inc. 1.95% 9.26 29.15 28.45 0.53   MMM 3M Company 1.84% -231.86 N/A 13.61 6.04   GILD Gilead Sciences, Inc. 1.78% -91.89 188.60 17.95 4.55   NKE NIKE, Inc. 1.77% -1.93 27.29 25.04 1.60   QCOM QUALCOMM Incorporated 1.75% -20.14 25.39 19.00 1.80   ADBE Adobe Inc. 1.64% 3.17 45.47 26.43 0   IDXX IDEXX Laboratories, Inc. 1.64% 24.19 50.49 47.08 0   WMT Walmart Inc. 1.56% 34.31 31.29 25.30 1.39   ABBV AbbVie Inc. 1.51% -20.92 48.11 14.38 3.84   KLAC KLA Corporation 1.49% -22.19 38.25 31.25 0.79   Click to enlarge Data: Portfolio123 Fundamentals VFQY is cheaper than VTI regarding valuation ratios, as reported in the next table. Growth rates are mixed: earnings growth is very close to the benchmark, sales growth is slightly below it, and cash flow growth is much higher. Return on Equity, a profitability metric, is similar to the benchmark.     VFQY VTI   Price/Earnings TTM 19.34 24.56   Price/Book 4.04 4.08   Price/Sales 1.68 2.64   Price/Cash Flow 12.86 16.66   Earnings growth 21.15% 21.04%   Sales growth 5.95% 8.13%   Cash flow growth 24.13% 8.81%   ROE 24.61% 23.95%   Click to enlarge Source: Fidelity, Vanguard Performance VFQY has underperformed VTI by 15.5% in total return since inception, and by 3.5% in 2024 to date. However, price history is short and may not represent the potential of the strategy over a full market cycle. VFQY vs. VTI since inception (Seeking Alpha) The annual sum of distributions has increased from $1.16 per share in 2019 to $1.74 in 2023. This growth rate of 50% in 4 years is far ahead of the cumulative inflation at the same time (about 19%, based on the Consumer Price Index). Although the dividend yield is low, this rate is competitive in the dividend growth arena VFQY distribution history (Seeking Alpha) Competitors The next table compares characteristics of VFQY and four major U.S. quality ETFs:  iShares MSCI USA Quality Factor ETF (QUAL). Invesco S&P 500 Quality ETF (SPHQ). JPMorgan U.S. Quality Factor ETF (JQUA). Fidelity Quality Factor ETF (FQAL).  They are passively managed and track different indexes. This list doesn't include funds combining the quality factor with other investing styles, like momentum or dividend (JOET, QDF, DGRW…).     VFQY QUAL SPHQ JQUA FQAL   Inception 2/13/2018 7/16/2013 12/6/2005 11/8/2017 9/12/2016   Expense Ratio 0.13% 0.15% 0.15% 0.12% 0.15%   AUM $334.48M $43.57B $9.02B $4.22B $957.83M   Avg Daily Volume $1.74M $246.43M $55.11M $29.28M $7.84M   Holdings 367 130 102 261 131   Top 10 16.21% 39.88% 48.15% 20.48% 34.45%   Turnover 55.00% 58.00% 65.00% 21.00% 43.00%   Click to enlarge Data source: Seeking Alpha VFQY is the smallest and least liquid of these funds, but the most diversified across holdings. The next chart plots total returns, starting on 2/19/2018 to match all inception dates. VFQY is the worst performer. VFQY vs. competitors since 2/19/2018 (Seeking Alpha) Takeaway Vanguard U.S. Quality Factor ETF is an actively managed fund invested in over 300 U.S. companies with quality characteristics. VFQY is well-diversified across holdings, sectors, and size segments. Aggregate fundamental metrics look good, with a tilt to value without sacrificing growth. However, VFQY has lagged behind the broad market and four passively managed quality ETFs since its inception. VFQY's track record is unconvincing, but it may be too short to assess the long-term potential of the strategy.  VFQY vs. competitors since 2/19/2018","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":null,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.24.2","shortVersion":"4.24.2","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2436704989"}