Investing in ETFs for 2025? Given their flexibility, tradability, and tax efficiency, investors may consider bundling ETFs together to craft an overall allocation. For example, one might combine large-, mid, and small-cap ETFs to craft an overall equity picture. One pair, however, could offer particularly potent upside. The duo of the American Century U.S. Quality Growth ETF (QGRO ) and the American Century U.S. Quality Value ETF (VALQ ), together, can craft a portfolio able to capture the spectrum of rate cut and soft-landing upside available next year.
See more: Quality Growth ETF QGRO Hits $1 Billion in AUM
QGRO tracks the American Century U.S. Quality Growth Index. The strategy invests in U.S. firms with high growth potential as well as strong fundamentals, looking at metrics like sales, cash flow, and profitability. In doing so, it looks to hold 35%65% of its portfolio in so-called “high-growth” stocks and 30%–65% of assets in “stable growth” firms. That approach has helped the fund perform well this year, per American Century Investments data. QGRO has returned almost 40% over the last year.
Investing in ETFs
On the other hand, those investing in ETFs might also want a value approach, too. Combining value and growth-focused ETFs could get the best out of each in a way that just holding a simple equities fund might not. That’s where a fund like VALQ comes in.
VALQ tracks the American Century U.S. Quality Value Index. In doing so, it looks for undervalued large cap names based on attributes like overall value and income. Much like its sibling, the strategy combines two different types of firms in its portfolio. The fund aims to have 30%–80% of the portfolio in value stocks with 20%–65% of stocks in sustainable income firms. That has helped the fund return VALQ 29.28% over the last year per American Century Investments data, charging just 29 basis points.
Together, the pair of funds provide a compelling option for investing in ETFs. Pairing the two, with relatively low fees, offers two specific styles that can rise together if a soft landing arrives. With one more rate cut in the cards this month, that could be a real potential for the start of 2025, making next month an attractive entry point into the ETF space for curious investors.
For more news, information, and analysis, visit the Core Strategies Channel.
VettaFi LLC (“VettaFi”) is the index provider for QGRO and VALQ, for which it receives an index licensing fee. However, QGRO and VALQ are not issued, sponsored, endorsed, or sold by VettaFi, and VettaFi has no obligation or liability in connection with the issuance, administration, marketing, or trading of QGRO or VALQ.
