Renowned value investor Jeremy Grantham is placing his bets on a select group of stocks with the launch of his firm’s premier active ETF: the GMO U.S. Quality ETF.
Tom Hancock, a partner at GMO, has been entrusted with the strategy for this new endeavor.
“There’s a lot more interest in active ETFs than there was even a few years ago,” Hancock told CNBC’s “ETF Edge,” noting the growing enthusiasm among clients for investing in ETFs due to tax benefits and trading ease among institutional clients.
Hancock expounds on the new ETF’s investment approach, focusing on companies with sustainable capital deployment and high returns, particularly within the technology, health care, and consumer staples sectors.
As of November 17th, the ETF’s top holdings, according to GMO’s website, include Microsoft, UnitedHealth, and Johnson & Johnson.
“[These companies] have strong balance sheets, a competitive edge, and a formidable market presence – qualities that will ensure their durability and significance in the future,” Hancock remarked.
The performance of these stocks has seen a varied trajectory this year: Microsoft surged by nearly 54%, UnitedHealth remained almost unchanged, while Johnson & Johnson saw a decline of over 15%.
Nate Geraci, President of ETF Store, views active ETFs as a natural progression within the industry.
“The ETF wrapper significantly lowers the hurdle for active managers aiming to generate after-tax alpha, providing improved prospects for outperformance,” Geraci opined.
Furthermore, Geraci believes ETFs offer a better opportunity for active managers to achieve long-term success.
Since its launch on Wednesday, the GMO U.S. Quality ETF has seen a modest increase of less than half a percent.
