ETF Education Report: ALPHA ARCHITECT U.S. QUANTITATIVE VALUE ETF (QVAL)

What this ETF is trying to do

The ALPHA ARCHITECT U.S. QUANTITATIVE VALUE ETF (ticker: QVAL) is an exchange-traded fund listed on the NASDAQ. While the specific strategy isn't detailed in the data, "value" ETFs generally look for companies that may be priced lower than their actual worth. This fund holds a total of 52 different companies.

What the numbers show

When looking at an ETF, it is important to understand two different types of returns: price return and total return.

• Price Return: This only measures how much the share price itself has changed.

• Total Return: This includes both the change in share price *and* any cash distributions (dividends) paid out to investors.

For QVAL, the numbers show growth in both areas:

• Year-to-Date (YTD): The price return is approximately 22.44%, while the total return is approximately 23.35%.

• One Year: The price return was approximately 28.64%, and the total return was approximately 30.24%.

• Three Years: The price return was approximately 63.37%, and the total return was approximately 71.52%.

To visualize this, the estimated price from roughly one year ago was $46.44. The current price is $59.74.

Income and distribution explanation

Some investors look for ETFs that pay out cash, known as distributions. QVAL has a distribution yield of approximately 1.07%. This means the cash paid out is about 1.07% of the ETF's price. The fund has made three distributions over the last 12 months, and these payments happen on an irregular or less frequent basis. It is important to remember that a distribution yield is not the same as total return.

NAV erosion explanation

"NAV erosion" refers to a situation where the value of the underlying assets in the fund decreases significantly over time. StockValueFinder uses an "erosion-risk score" to measure this risk. For QVAL, the erosion score is 100, which is labeled as "No price erosion detected." There is no severe erosion-risk flag for this ETF.

Top Holdings

The following are the top holdings in the portfolio (note that this is a partial list):

• Best Buy Co Inc (2.39%)

• TD Synnex Corp (2.32%)

• Delta Air Lines Inc (2.26%)

• United Airlines Holdings Inc (2.26%)

• HP Inc (2.15%)

• Exelixis Inc (2.14%)

• Macy's Inc (2.14%)

• Valero Energy Corp (2.14%)

• HF Sinclair Corp (2.12%)

• Incyte Corp (2.11%)

Pros

• The fund has shown positive price returns and total returns over the one-year and three-year periods.

• The erosion-risk measurement is rated as "good."

Cons

• Distributions are irregular and do not happen on a set schedule.

• The distribution yield is relatively low compared to some high-income funds.

Beginner takeaway

When studying QVAL, notice the difference between its price return and its total return. The total return is higher because it accounts for the cash distributions paid to shareholders. Always remember that past performance does not guarantee what will happen in the future.