2023 is more than halfway complete, including a “mini bank crisis,” rising rates, and a soft vs. hard landing debate. Despite so many twisting and competing market narratives, a few ETFs have stood out among the competition. The ETF landscape has grown more diverse than ever, and low fee strategies can offer robust returns. One strategy to consider may be the quality growth ETF QGRW, which sits in the top five ETFs charging a fee less than 30 basis points (bps) per Logicly data.
Investors and advisors alike understand that cost matters when choosing an ETF, but performance matters most. With the WisdomTree U.S. Quality Growth Fund (QGRW), however, investors can find not only a low fee, but also potent YTD returns. QGRW has returned 44.25% YTD charging just 28 bps. With that return, QGRW has outperformed the SPDR S&P 500 ETF Trust (SPY), which has returned just 18.4% YTD. SPY may charge just a nine bps fee, but that performance gap for a low bps delta may appeal.
So how has QGRW made those returns happen? QGRW tracks a market cap-weighted index of 100 large-cap growth firms, investing for quality characteristics from 500 initial names. QGRW weights all eligible firms based on equal-weighted growth and quality factors. It assesses growth based on earnings insights and trailing five-year EBITDA. It measures quality, meanwhile, based on three-year return on assets and equity averages.
Taken together, that’s helped the strategy reach nearly $50 million since its launch last year. QGRW comes from the same ETF family as the WisdomTree U.S. Quality Dividend Growth Fund (DGRW). The quality growth ETF also shares the same management team as DGRW, which launched in May 2013 and has had a notable track record since then.
A quality approach to growth right now could make a lot of sense. Top heavy indexes have returned well thanks to the megacap names leading the way, yes. However, a top heavy portfolio could struggle if the market changes sufficiently. Instead, trusting growth firms that meet a quality screen could offer a potent alternative. For those investors looking at a high performing, low strategy, QGRW could fit the bill.
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