The GMO U.S. Quality ETF (NYSEARCA: QLTY ) seeks quality stocks to buy.
At the end of May, Barron’s published an article about investing guru Jeremy Grantham’s new ETF and how it’s beating the markets despite not owning Nvidia (NASDAQ: NVDA ). “The GMO U.S.
Quality ETF’s disciplined approach uses both quantitative and fundamental techniques to assess the relative quality and valuation of U.S.-domiciled companies and aims to exploit a long-term investment horizon while withstanding short-term volatility in an actively managed ETF format,” states the EYF’s website.
In fact, Grantham does not manage the fund. Tom Hancock, GMO’s Head of Focused Equity, does this with portfolio managers Ty Cobb and Anthony Hene. Hancock likens the latest AI craze to the dot-com froth of the late 1990s where stocks traded at nosebleed valuations.
With Nvidia valued at twice the S&P 500 and Tesla’s (NASDAQ: TSLA ) margins likely to fall, he steered clear of these two Magnificent Seven stocks. Launched last November, the ETF, which focuses on both growth and value, is up nearly 20% since its inception in line with the index. Here are three stocks to buy from QLTY’s 35 holdings.
Microsoft (MSFT) Microsoft (NASDAQ: MSFT ) is QLTY’s largest holding with a 7.4% weighting. It is the top Magnificent Seven holding.
The other four weights range between 5.3% and 2.6%.
Hancock considers Microsoft a cheaper way to play AI than Nvidia. Microsoft currently is valued at 14.1x sales and 30.
4x .
