ETF Talk

Finding a Fund with High-Quality U.S. Holdings

The Fidelity Quality Factor ETF (FQAL) tracks an index of large- and mid-cap U.S. companies with a higher quality profile than the broader market.

FQAL evaluates the top 1,000 stocks (by market cap) on balance sheet measures of quality, scoring them based upon these key factors: free cash flow margin, cash flow stability and return on invested capital. The fund invests at least 80% of its total assets (currently $65.7 million) in these quality holdings.

With FQAL’s strategy, sectors are cap-weighted to provide more market-like exposure. Analysts at Zacks Research give the fund an overall “B” rating for its exposure coverage, volatility and cost. Investors looking to invest in FQAL should do their due diligence to gauge whether it is a good fit for their portfolios.

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