The onset of an aggressive tariff policy, coupled with economic policy uncertainty, led to a rapid decline of expectations for U.S. economic performance in April. In a challenging environment for growth, the American Century U.S. Quality Growth ETF (QGRO ) continues to rise above, trimming losses through its blended factor approach to growth investing.
This year is proving to be a challenging one for growth outlooks in the U.S. A range of risks threaten markets, weighing investor sentiment heavily as pronounced volatility continues. However, instead of trimming growth exposures, investors would do well to instead look to more dynamic and selective strategies within the category.
QGRO seeks to track the American Century U.S. Quality Growth Index. The strategy focuses on large- and midcap companies that demonstrate several factors. Those include quality, high-growth, and solid fundamentals for their valuations compared to peers.
The starting universe for the fund is the S-Network US Equity Large/Mid-Cap 1000 Index. The initial screen focuses on companies generating elevated momentum, profitability, and returns. Each company is then measured for their earnings, sales, cash flow growth, price to earnings, and price to book and assigned a growth score.
QGRO takes growth investing one step further by offering dynamic exposure across the growth category. The fund invests in both high-growth and stable-growth companies and alters the weighting to the two categories depending on the market environment. The strategy rebalances monthly, remaining responsive to changing market dynamics, and reconstitutes quarterly.
The strategy is one that generated significantly better performance this year compared to the benchmark Russell 1000 Growth.
A Quality Focus Offers Diversified Opportunities in Growth
In the first quarter, midcap outperformance as well as consumer discretionary and information technology sector gains buoyed QGRO’s performance. The selective screens and weightings of the strategy also prevented drag that impacted broad growth strategies.
“In the automobile industry, our underweight allocation to electric vehicle maker Tesla relative to the benchmark was a significant contributor,” the firm noted in the fund’s quarterly commentary.
In Q1, the strategy maintained a 35% exposure to stable growth and a 65% exposure to high growth. Top sector weights included information technology at 32%, consumer discretionary at 16%, and health care at 13%, as of March 31, 2025.
QGRO is a 5-star Morningstar-rated fund within the large growth category and carries an expense ratio of 0.29%.
For more news, information, and analysis, visit the Core Strategies Channel.
VettaFi LLC (“VettaFi”) is the index provider for QGRO, for which it receives an index licensing fee. However, QGRO is 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.
