The market is approaching superheated status, with valuations exceptionally high for key megacap tech firms. While the so-called Magnificent Seven delivered for investors in 2024, it’s a new year, and their outsized weight in portfolios looms. That concentration risk may see some investors look to diversify into other growth segments. In that scenario, leaning on quality can help screen out firms lacking fundamental strength. The quality growth ETF QGRO, for example, is beating its averages and may present a strong option.
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The American Century U.S. Quality Growth ETF (QGRO ), charges a 29 basis point fee. The quality growth ETF tracks the American Century U.S. Quality Growth Index. In doing so, the index screens for factors like quality, income, and growth based on metrics including sales, cash flow, profitability, and more.
Quality Growth ETF QGRO's Approach
That fundamental focus helps the portfolio combine two key segments. Between 35% and 65% of its holdings include “stable-growth firms,” while another 35% to 65% sits in “high-growth” companies.
Together, that has helped the quality growth ETF get off to a strong start in 2025. QGRO has returned 6% YTD, according to American Century Investments data. In doing so, it has outperformed both its ETF Database Category and FactDet Segment Averages, per ETF Database data. Those averages sit at 4.2% and 2.5%, respectively.
A quality growth ETF could provide a helpful boost for investors this year. With the economy still solid overall, a growth approach can still pay off for investors. That said, screening for quality can find firms positioned for a potential downturn or volatility this year. QGRO, then, could make for a worthwhile satellite addition to portfolios.
American Century Investments’ VP, Head of Portfolio Solutions Rene Casis will speak at the Exchange ETF Conference in Las Vegas next month. He will take part in the “Factors 2.0: The smarter way to index?” panel on Tuesday, March 25 at 9 a.m. Find out more about signing up for Exchange here.
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