VALQ jumped in June as investors moved to value

State Street Global Advisors reported that value-focused exchange-traded funds attracted $13 billion in June as investors shifted away from growth funds amid a global technology sell-off. The inflows put value strategies ahead of growth for year-to-date allocations after growth had taken in about $40 billion over the prior three months.

The American Century U.S. Quality Value ETF (VALQ) was among the beneficiaries of the June rotation. VALQ follows the American Century U.S. Quality Value Index, which screens large- and mid-cap U.S. companies for three characteristics: strong earnings quality, relatively attractive valuations and sustainable dividend income. The approach selects stocks on those fundamentals rather than labeling them strictly as growth or value.

VALQ’s sector mix differs from some traditional value funds. The ETF held roughly twice the technology exposure of the Vanguard Value ETF and shared about one-third of its holdings with that fund. Higher weightings in semiconductor equipment and industrial-technology names contributed to VALQ’s performance in June.

Applied Materials rose 57.8% in June, KLA gained 55.5% and Corning advanced 44.6%. Those three companies were the largest single-stock contributors to VALQ’s alpha for the month. Applied Materials and KLA supply equipment for chipmakers and have benefited from renewed spending on fabrication capacity. Corning produces glass and optical components used in networks and hardware buildouts.

State Street raised the question of whether value can sustain momentum as the corporate earnings season begins in July. The firm noted that earnings that support the rotation could keep investor interest in value funds that retain meaningful technology exposure, while a stabilization in technology shares could shift flows elsewhere.

Index-provider details for VALQ show VettaFi LLC serves as index provider and receives licensing fees. VALQ is not issued, sponsored, endorsed or sold by VettaFi, and VettaFi has no obligation related to the ETF’s issuance, administration, marketing or trading.