Jeremy Grantham Launches New Active ETF with Focus on Quality Stocks
Legendary value investor Jeremy Grantham has entered the world of active ETFs with the launch of the GMO U.S. Quality ETF. Grantham’s firm has put GMO partner Tom Hancock in charge of the new ETF, which is built around companies that can sustainably deploy capital and high rates of return, with a focus on technology, health care, and consumer staples.
In an interview with CNBC’s “ETF Edge,” Hancock explained the growing interest in active ETFs, citing tax advantages and the ease of trading them as key factors. The GMO U.S. Quality ETF’s top holdings as of November 17th include Microsoft, UnitedHealth, and Johnson & Johnson. Hancock believes these companies have a competitive edge and strong balance sheets, making them “battleship companies that are going to remain relevant and important going forward.”
However, the performance of the ETF’s top holdings has been mixed so far this year, with Microsoft up almost 54%, UnitedHealth flat, and Johnson & Johnson down more than 15%. Despite this, ETF Store President Nate Geraci sees active ETFs as a natural evolution in the industry, offering a better chance at outperformance and long-term success for active managers.
Since its launch on Wednesday, the GMO U.S. Quality ETF is up less than half a percent, reflecting early interest in Grantham’s foray into the active ETF space. With the backing of a respected value investor like Grantham and the expertise of GMO partner Hancock, the new ETF has the potential to attract investors seeking exposure to quality stocks in a convenient and tax-efficient manner.