FQAL: A Quality ETF Underperforming The Market

Carlos R. Tartarini
543 Followers
(10min)

Summary

  • FQAL offers exposure to high-quality companies with strong fundamentals but has consistently underperformed benchmarks and similar quality ETF.
  • FQAL's stock selection methodology boosts profitability measures and growth metrics, but valuation multiples are higher compared to peer group of fundamental ETFs.
  • While FQAL's risk-adjusted returns are in line with the benchmark, the fund has delivered sub-par performance over time, lagging both peer groups and the broader market.
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The concept behind funds like Fidelity Quality Factor ETF (NYSEARCA:FQAL), which offers higher quality exposure, is compelling. After all, investors are expected to favor highly profitable companies with healthy margins and good financial indicators.

However, the reality is far more complex, as

This article was written by

543 Followers
I am an individual investor. My main focus on investing is to achieve capital appreciation by selecting high value and compelling growth opportunities.

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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