When market volatility catches investors by surprise, it’s imperative to have quality exposure to aid with portfolio stability. With that, employee-owned investment manager Neuberger has expanded its actively managed ETF lineup with the launch of the Neuberger Quality Select ETF (NQLT). The fund gives investors quality exposure to fundamentally resilient mid- and large-cap companies.
NQLT enters a crowded field of quality-focused funds, joining peers like the American Century U.S. Quality Growth ETF (QGRO ) and the VictoryShares Free Cash Flow ETF (VFLO ) that offer passive strategies. While funds like QGRO lean heavily on structural factors and VFLO isolates companies trading at a discount with high free cash flow yields, NQLT sets itself apart by leveraging active, fundamental management across the quality spectrum.
Key Takeaways:
- Neuberger expanded its active ETF suite with the launch of NQLT, which targets fundamentally resilient mid- and large-cap companies.
- NQLT differentiates itself from passive quality funds like QGRO and VFLO by utilizing valuation-conscious, active management. This is to identify companies with strong returns on invested capital and durable cash flows.
- The fund features a net expense ratio of 0.48% and entirely avoids highly speculative or unproven growth companies. This allows it to serve as a more stable core portfolio allocation.
See More: Add Quality to Your International Equities Exposure With QINT
Rigorous Approach to Quality
NQLT is managed by Daniel P. Hanson, CFA, senior portfolio manager and head of Neuberger’s quality equity group. Hanson brings more than 25 years of equity management expertise to the vehicle, with the backing of an institutional investment team that has more than two decades of industry experience.
Neuberger’s quality equity group oversees more than $9.0 billion in assets across its suite. The team applies a valuation-conscious, bottom-up approach to select NQLT’s high-conviction portfolio.
“In today’s market environment of increasingly narrow market leadership, extreme factor and style moves, coupled with rapid technological change, we believe our high-quality equity strategies serve as an essential core allocation,” Hanson said. “At the heart of our investment philosophy is a simple belief: exceptional businesses can create exceptional long-term outcomes. We focus on companies with durable competitive advantages, strong cash flow generation, and high returns on invested capital.”
Additionally, NQLT aims to isolate established economic models while entirely avoiding highly speculative or unproven growth companies. The fund is available to investors with a competitive net expense ratio of 0.48%.
Active Architecture for Today's Investor
The launch of NQLT follows the broader trend of more active ETFs continuing to enter the marketplace. State Street Global Advisors (SSGA) noted in its June flash flows report that active ETFs are on pace to clear a record $820 billion in inflows for the year.
“Actively managed ETFs have emerged as a preferred structure for a growing number of investors, as they seek solutions that deliver liquidity, transparency, and the benefits of active management,” said Anil Abraham, head of ETF product development at Neuberger. “The launch of NQLT expands access to Neuberger’s equity capabilities, offering clients a differentiated, high-conviction approach to invest in quality companies.”
Neuberger debuted its first actively managed ETF in 2022. Since then, the firm has rapidly scaled its platform to 14 funds and over $3.8 billion in assets under management. NQLT adds a robust equity allocation to this growing ETF ecosystem, which includes varying levels of exposure from core equity to international.
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VettaFi LLC (“VettaFi”) is the index provider for QGRO and VFLO, for which it receives an index licensing fee. However, QGRO and VFLO 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 and VFLO.
