QVAL's "Stunning" Run Is a Gold-and-Gas Bet Wearing a Value Label

The promise of the Alpha Architect US Quantitative Value ETF (QVAL) has always been one sentence long: buy the cheapest U.S. stocks, hold them equally weighted, and let mispricing do the work. Then the past year happened. As of late August the fund was up about 28% year to date and roughly 38% over the trailing twelve months, trading within a dollar of its 52-week high of $62.73.

Read that as "cheap stocks finally paid," and the takeaway writes itself. Read the holdings list, and the takeaway changes. QVAL's three largest positions are all precious-metals miners — AngloGold Ashanti at 2.9% of assets, Hecla Mining at 2.8%, and Newmont at 2.7% — with energy producers like APA and Expand Energy close behind. The stunning returns are not evidence that value broadly worked. They are evidence that one bet inside the value book worked: commodities.

That is not a stock-picking accident; it is the mechanism of the screen. QVAL ranks stocks on EBIT relative to total enterprise value — an earnings yield on the whole business, or in plain language, how much operating profit you get per dollar of what it would cost to own the entire company. When gold and natural gas prices surge, producers' trailing operating earnings surge with them, and the cheapest stocks in America by that measure become miners and drillers whose profits ride a commodity tape. Cheapness measured against today's elevated commodity earnings is real, but it is forecast-dependent, not static. When a stock's forward P/E runs far above its trailing P/E, the market is quietly forecasting that the earnings behind the cheapness won't last.

The top of the book has already repriced

Look first at the gold names that actually delivered the returns. AngloGold, the fund's top holding, has spectacular current economics — return on equity near 46% and free cash flow up roughly 150% year over year. Yet it trades at about 16 times trailing earnings and about 27 times forward earnings. A stock that looks cheap on the money it already made and dear on the money analysts expect next year is the market's way of saying the commodity windfall is priced in. That caution is grounded in the metal itself: after a record 2025 in which gold broke through $4,000 an ounce, 2026 brought consolidation — prices touched a record above $5,500 in January, dipped below $4,000 by late June, and left gold roughly 7% below the start of the year by mid-year.

Hecla is the bluntest version of cheapness consumed. The stock is up roughly 134% over the past year and still sits about 39% below its 52-week high of $34.17. Today it trades at 42 times trailing earnings and more than 80 times forward. A 42-times-earnings holding is not a value holding; it is a leveraged silver-and-gold bet whose re-rating has already run. Newmont, the steadiest of the three at about 16 times trailing earnings with net cash, instead reads stretched on momentum — an RSI near 71, territory often read as overheated, with the stock a quarter above its 50-day average.

The energy names still earn the label

Drop to the energy side and the value label fits better, with a caveat attached. APA trades under 9 times trailing earnings, under 8 times forward, and about 3 times EBITDA, with a 26% return on equity. That is cheap by any comparison — and cheap for a reason everyone can see: revenue down roughly 11% year over year. Expand Energy shows the same shape as AngloGold — about 8 times trailing but 15.5 times forward, the market expecting gas earnings to normalize. Marathon Petroleum is the improving report card a value screen is supposed to find: about 12 times trailing earnings, a 48% return on equity, and free cash flow up more than 250% year over year. Cheap and accelerating is the combination that keeps a book like this honest.

Two of the largest positions are not commodity plays at all. Regeneron trades near 19 times earnings with roughly 85% gross margins and beat the current quarter's EPS consensus by a wide margin — $14.29 earned against about $10.16 expected. Elevance Health trades at barely 11 times forward earnings, but its operating margin has compressed to about 3.6%, which is why nobody is calling it cheap and clean. These are the ballast: steady compounders the screen still happens to like, holding the book together while the cyclicals swing.

"Beating peers" is true only for certain peers

The headline's two claims deserve pruning. First, "beating peers" depends on the peer. QVAL's 38% beat Vanguard's broad large-value fund VTV, which returned about 26% over the same year — a real edge over the diversified value index. But the best-performing value fund of the period returned roughly 72% for the year, and it got there by loading up on semiconductor names like Micron and Intel, not by holding cheap cyclicals. The value factor paid in many flavors in this cycle; the flavor that paid most was the sharpest sector bet. Outperformance among value funds has largely been a sector-rotation story wearing different labels.

Second, "cheaply priced" is the half that has eroded. The fund was genuinely cheap a year ago. It is less cheap now at the top of the book, because the top of the book already re-rated and the market is paying forward multiples that assume the windfall fades. That is baked into the product: QVAL is non-diversified, holds roughly 50 equally weighted names, expects portfolio turnover above 100% a year, and charges a 0.28% fee, layering forensic-accounting and earnings-quality screens on top of the price ranking. It is engineered to buy today's cheapest money-earners and sell them when they stop being cheap. It does not own "value" as a stable category; it owns whoever is currently depressed and producing cash.

Where it belongs in a portfolio

Put it where it fits. QVAL is not a core holding and not a market substitute — it is the aggressive leg of a barbell, the sleeve that owns distressed commodity cyclicals while the other leg holds quality growth and durable cash-flow income. It does its best work in cyclical recoveries and value rotations, and its honest risk is that a broad risk-off tape hits its most leveraged commodity names hardest.

The trigger to watch is the forward-earnings gap in the gold names. If AngloGold's and Hecla's forward multiples stay far above their trailing ones through quarterly resets, QVAL is holding momentum, and the returns ahead belong to the commodity tape rather than to a discount closing. If the energy names keep their single-digit earnings yields while revenue inflects higher, that is the improving report card that says the engine is still buying the right things. Until one of those resolves, treat the "stunning returns" as history — and if you buy, buy for the part of the fund that is still doing what it says, not for the part that already ran.