Global investment firm GMO today launched its first exchange-traded fund, the GMO U.S. Quality ETF (NYSE Arca: QLTY). The actively managed ETF seeks to generate total return by investing in U.S. equities believed to be of high quality.
The fund’s management team believes that companies with established track records and strong fundamentals can outgrow average companies over time. QLTY’s disciplined approach uses both quantitative and fundamental techniques to assess the relative quality and valuation of U.S.-domiciled companies. It aims to exploit a long-term investment horizon while withstanding short-term volatility.
Finding Quality Companies That Deliver High Returns
“Quality has a claim on being the most mispriced characteristic in the market over the last 100 years,” said GMO Co-Founder Jeremy Grantham. “Since we began researching quality in the 1980s, GMO has focused on finding companies with a consistent and enduring ability to deliver high returns on their investments.”
Launching QLTY offers an implementation structure that aligns with investors seeking tax-advantaged and operationally efficient access to GMO strategies. GMO launched QLTY in partnership with the new Goldman Sachs ETF Accelerator. The digital platform enables Goldman Sachs’ clients to launch, list, and manage ETFs quickly and efficiently.
“Investing in quality businesses has won over time with lower risk,” said Tom Hancock, head of GMO-focused equity and portfolio manager of QLTY. “With our focus on valuation, we believe GMO’s quality strategy is truly for all markets.”
Per Hancock, this strategy lets GMO “find great opportunities at attractive prices to participate in the upside of growth periods.” And it does this “while also mitigating risk in weaker environments.”
“Today, as investors have concerns about issues like interest rates, inflation, and the threat of a recession, we believe quality can be a particularly worthwhile, resilient investment,” Hancock added.
VettaFi’s vice chairman Tom Lydon said: “The biggest concern among financial advisors going into 2024 is market volatility. GMO picked a great time to bring their active quality strategy to market in an ETF wrapper.”
Todd Rosenbluth, head of research at VettaFi, added: “Advisors have increasingly turned to active ETFs in 2023. It is exciting to have a well-established manager like GMO become part of the ETF universe.”
QLTY carries an expense ratio of 50 basis points.
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