WisdomTree Investments has added two new ETFs to its roster. The firm launched two new quality growth ETFs on Thursday, adding to its existing suite, led by the WisdomTree Floating Rate Treasury Fund (USFR) and the WisdomTree U.S. Quality Dividend Growth Fund (DGRW) which each have more than $10 billion in AUM.
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The new ETFs, the U.S. MidCap Quality Growth (QMID) and U.S. SmallCap Quality Growth (QSML) funds, both charge 38 basis point (bps) fees. The strategies track the WisdomTree MidCap Quality Growth Index and the WisdomTree U.S. SmallCap Quality Growth Index.
Quality Growth ETFs: The Approach
The pair of quality growth ETFs look for stocks that meet both quality and growth standards. According to a press release from the firm, the performance spread between “high profitability” and “low profitability” firms is much greater outside of large-cap stocks. By applying a quality screen, then, the pair of ETFs will look for high performers with upside.
“The recent divergent and rather large spreads between major growth indexes makes it abundantly clear that having the right index screens and rebalancing process are critical for performance,” said WisdomTree Global Chief Investment Officer Jeremy Schwartz.
“By employing a process that focuses on large-, mid-, and small-cap stocks scoring highly on a combined feature set of robust quality (profitability ratios) and strong earnings and sales growth, we believe QMID and QSML are not just sound long-term factor strategies but a great combination for today’s macro landscape,” he added.
With smaller firms underpriced relative to some of the mega-cap tech names out there, QMID and QSML could be ETFs to watch. The quality growth duo’s focus on quality especially could prove helpful with high interest rates persisting, testing the balance sheets of smaller companies. Together, the duo may be worth considering for a portfolio refresh as 2024 kicks into gear.
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