Active value ETF FLV draws interest from growth-heavy portfolios

American Century’s Focused Large Cap Value ETF (FLV), an actively managed fund with $343.9 million in assets and a 49-stock portfolio, has seen increased investor interest as some allocators add value exposure to growth-heavy equity holdings.

FLV seeks to identify undervalued large-cap companies and aims to outperform the Russell 1000 Value Index, the benchmark tracked by many passive value funds. Passive funds that follow that index typically hold more than 860 stocks; FLV’s concentrated roster allows managers to select a smaller set of companies they view as credible value opportunities and to avoid names they judge to be potential value traps.

Investor attention has focused on growth sectors in recent months, particularly companies tied to artificial intelligence themes. Financial advisers and portfolio managers report using FLV to complement growth positions, increase diversification within equity allocations, add potential income and reduce sensitivity to shifts in market sentiment.

Active management gives FLV’s team discretion to emphasize firms with lower valuation metrics, steadier cash flows and regular dividend payouts. Saxo noted: “Value stocks are generally associated with lower valuation metrics, steadier cash flows and more frequent dividend payouts, while growth stocks are usually priced for stronger future expansion. This means value stocks may suit investors looking for stability and income, whereas growth stocks tend to carry higher expectations and greater sensitivity to sentiment.”

The ETF’s concentrated structure can create rerating opportunities if markets revise their view of a company’s prospects. Managers aim to buy shares of firms they assess as temporarily undervalued and hold them until fundamentals improve. Market participants caution that identifying genuinely undervalued stocks requires stock-picking skill, since some beaten-down names can remain depressed for long periods.

Advisers seeking to rebalance style risk say FLV’s active approach and smaller holding count distinguish it from passive value ETFs and make it a tool to add a value-focused sleeve within broader equity allocations.