Is American Century U.S. Quality Growth ETF (QGRO) a Strong ETF Right Now?

Launched on 09/10/2018, the American Century U.S. Quality Growth ETF (QGRO) is a smart beta exchange traded fund offering broad exposure to the Style Box - All Cap Growth category of the market.

What Are Smart Beta ETFs?

Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.

A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.

However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.

By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.

The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.

Fund Sponsor & Index

The fund is managed by American Century Investments, and has been able to amass over $1.38 billion, which makes it one of the larger ETFs in the Style Box - All Cap Growth. Before fees and expenses, QGRO seeks to match the performance of the AMERICAN CENTURY U.S. QUALITY GROWTH IND.

The American Century U.S. Quality Growth Index seeks to select securities of large and mid-capitalization U.S. companies with attractive growth and quality fundamentals.

Cost & Other Expenses

For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.

Operating expenses on an annual basis are 0.29% for this ETF, which makes it on par with most peer products in the space.

It's 12-month trailing dividend yield comes in at 0.27%.

Sector Exposure and Top Holdings

Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.

For QGRO, it has heaviest allocation in the Information Technology sector --about 34.90% of the portfolio --while Consumer Discretionary and Healthcare round out the top three.

Looking at individual holdings, Booking Holdings Inc Common Stock Usd.008 (BKNG) accounts for about 3.56% of total assets, followed by Meta Platforms Inc Class A Common Stock Usd.000006 (META) and Tjx Companies Inc Common Stock Usd1.0 (TJX).

The top 10 holdings account for about 29.26% of total assets under management.

Performance and Risk

Year-to-date, the American Century U.S. Quality Growth ETF has added roughly 3.71% so far, and it's up approximately 24.43% over the last 12 months (as of 05/13/2025). QGRO has traded between $80.24 and $109.93 in this past 52-week period.

The ETF has a beta of 1.11 and standard deviation of 21.63% for the trailing three-year period. With about 192 holdings, it effectively diversifies company-specific risk.

Alternatives

American Century U.S. Quality Growth ETF is a reasonable option for investors seeking to outperform the Style Box - All Cap Growth segment of the market. However, there are other ETFs in the space which investors could consider.

Fidelity Blue Chip Growth ETF (FBCG) tracks ---------------------------------------- and the iShares Core S&P U.S. Growth ETF (IUSG) tracks S&P 900 Growth Index. Fidelity Blue Chip Growth ETF has $3.94 billion in assets, iShares Core S&P U.S. Growth ETF has $21.43 billion. FBCG has an expense ratio of 0.59% and IUSG charges 0.04%.

Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - All Cap Growth.

Bottom Line

To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.

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This article originally published on Zacks Investment Research (zacks.com).

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