More than 30 years have passed since the first ETF hit the scene. Since then, with their tax efficiency and transparency, ETFs have taken the asset management world by storm. From thematic ETFs to fixed income ETFs, active to passive, the ETF wrapper has taken on billions and billions worth of AUM. Looking forward, then, what next stages of ETF evolution might markets see? The quality ETF QGRO may merit a place in that conversation.
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The American Century U.S. Quality Growth ETF (QGRO ) tracks the American Century U.S. Quality Growth Index. Charging 29 basis points (bps), QGRO invests in U.S. firms offering higher growth potential and stronger financial fundamentals. Specifically, it screens for stocks based on growth, quality, and income via metrics like cash flow and sales. Taken together, it looks to invest 35 to 65 percent of its assets in high-growth stocks and the rest in more stable stocks.
Quality ETF QGRO and Evolving ETF Index Investing
That approach represents an intriguing play on factor investing. Its quality ETF approach provides exposure to some potential standout names but by emphasizing some deeper, fundamental metrics. The fund’s holdings typically include between 150 and 250 firms according to its prospectus. What’s more, the fund rebalances its holdings and index monthly, with reconstitution quarterly.
The strategy has taken that intensified approach to factor investing to return 24% over one year as of February 28th. That one year performance outpaced its benchmark, the Russell 1000 Growth Index, per American Century Investments data.
American Century Investments VP and Head of Portfolio Solutions Rene Casis will join the “Factors 2.0: The smarter way to index” panel at Exchange in Las Vegas later this month. Hosted by TMX VettaFi senior investment strategist Cinthia Murphy, the discussion will focus on the increasing use of factor ETFs for index construction.
Looking ahead, QGRO could present one solid example in that space. For those considering quality ETF investing, QGRO could provide a compelling opportunity.
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