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I believe the GMO U.S. Quality ETF remains a Hold, as there is no strong bull case at this point. QLTY has mildly underperformed IVV since the beginning of the year, and I expect it to continue lagging the market into 2027. Growth and GARP characteristics of QLTY's concentrated IT-heavy portfolio have improved since May, yet its PEG ratio is still considerably larger than IVV's, welcoming a neutral stance.
GMO U.S. Quality ETF employs an active, quality-centered strategy that brings together fundamental and quantitative methods. I maintain the Hold rating on QLTY owing to its recent underperformance vs. IVV, unappealing risk metrics, and the factor mix light in GARP stocks. Quality characteristics of the QLTY portfolio are impressive, yet they alone cannot drive outperformance.
QLTY: Excellent Factor Mix, Robust Returns, A Few Issues Not To Overlook
The GMO U.S. Quality ETF (NASDAQ:QLTY) has attracted $3 billion since launching in November 2023 by focusing on companies with exceptional returns on capital.
Each month brings new ETFs to the ever-expanding ETF ecosystem. And October had its fair share of intriguing launches.
On the latest ETF 360, VettaFi's Cinthia Murphy interviewed GMO Asset Allocation's Asset Allocation Strategist Catherine LeGraw. The two discussed quality, the speculative market, and value dislocation.
On Tuesday, GMO launched three new active ETFs. They are the GMO International Quality ETF (QLTI), the GMO U.S. Value ETF (GMOV), and the GMO International Value ETF (GMOI).
The GMO U.S. Quality ETF is designed to generate total return by investing in high-quality U.S. equities. One thing that stands out about the top 10 holdings of QLTY is Nvidia is nowhere to be found. The real differentiator is Healthcare, which has a more than double weighting relative to the S&P 500.
No recent filings indexed.