Good interview in Barrons with Tom Hancock of QLTY. David has highlighted this fund recently. He is not a fan of NVDA or TSLA due to valuation concerns but does hold positions in the other Mag 7. Interesting that he has been able to keep pace with SPY since launch even without NVDA. The OEF version of this fund has outperformed SPY over the long term.
https://www.barrons.com/articles/investing-jeremy-grantham-quality-etf-nvidia-tesla-stock-1377e79fSome key excerpts:
“So what else do Hancock and his team at GMO like? Hancock does believe in AI. He just thinks that there are better, more affordable ways to play the trend, such as Microsoft, which has an investment in Sam Altman’s ChatGPT creator, OpenAI; the cloud software company Salesforce.com; and Accenture, the consulting firm. The GMO U.S. Quality ETF  also owns Oracle and the chip-equipment manufacturers KLA and Lam Research”
It isn’t all about tech. Hancock said consumer staples and healthcare are also top areas of focus.
Quality value is about more than cyclicals,” Hancock said. “The differentiation for us is that we hold both growth and value stocks. It’s good for diversification.” To that end, the ETF also has big positions in more defensively oriented stocks, such as Coca-Cola, Procter & Gamble, UnitedHealth, Johnson & Johnson, and GE Aerospace.
Comments
@MikeW - thanks for posting this. I went looking for the article this morning but I had already deleted the email it came in and couldn't retrieve it.
Anyway, I have been thinking about buying some NVDA to leave to my kids not only because it's a good stock but also to take advantage of the upcoming 10:1 split. Then I decided that well, lets see how much I already kinda, sorta own. I combed through my mutual funds, CEF's and ETF's and came up with these percentages from the holdings information {6.33%, 12, 3.8, 25.87, 5.46, 3.76, 9.46, 5.02, 5.04, and 2.88}.
It seems that it hangs out in a lot of places. The kids can just fight it out over those and Mr. Hancock can just wait until he finds it worthy. I do own a position in QLTY.
QLTY was on my watch list for quite some time.
After much deliberation (too much?), I initiated a sizable position in this ETF two weeks ago.
At the present time, I'm waiting to see QLTY to beat SPHQ over any period of time. Maybe that's not a fair comparison.
Both funds implement the same strategy and have the same managers
but GQETX holds some foreign stocks while QLTY does not.
Portfolio Backtest
GQETX has outperformed SPHQ over SPHQ's lifetime. OTOH, GQETX is 21% foreign, and another 18.87% is "other" than equity.
There does seem to me to be some difference in strategies based on M*'s strategy summaries "pulled from the most recent official document (prospectus or supplement)."
QLTY "seeks to achieve its investment objective by investing primarily in equities of U.S. companies that the fund’s adviser, Grantham, Mayo, Van Otterloo & Co. LLC (“GMO” or the “Adviser”), believes to be of high quality. Equity securities primarily include common and preferred stocks and, to a lesser extent, other stock-related securities,"
GQETX has a more expansive startegy: "GMO seeks to achieve the fund’s investment objective by investing the fund’s assets primarily in equities of companies that GMO believes to be of high quality. At times, the fund may have substantial exposure to a single asset class, industry, sector, country, region, issuer, currency or companies with similar market capitalizations."
I'll keep QLTY on my watch list, but I am not inclined to pay its expense ratio until it has more of a track record. It should turn out to be as reasonably safe as any other fund with a similar portfolio.