Jenna Dagenhart:

Hello and welcome to The ETF Show. Joining us now is WisdomTree Investments' Global CIO, Jeremy Schwartz. Well, Jeremy, great to have you with us. First, what's the name of the ETF that we're talking about today?

Jeremy Schwartz:

Thanks for having us here today, Jenna. So we're going to be talking about the WisdomTree US Quality Growth ETF. The ticker is QGRW. It's one of our newer launches, but it's been off to a very interesting start in the short six months has been live. It's been right in the prime focus of what's been happening in the markets this year.

Jenna Dagenhart:

And what's the strategy behind it?

Jeremy Schwartz:

So there's a lot of different ways identifying growth stocks, there's also been a lot of research in factors and quality has been one of the preferred factors in some of the academic research. And we're marrying those two factors together in sort of combined ranking of identifying high quality companies that are also delivering some of the better growth rates out there. So there's a composite quality and growth ranking. You heard a lot about unprofitable tech companies last year during the pandemic driving the market higher, and this is one of the ways to say, "Hey, these companies have good profits, good return on capital, but also growing faster than the typical stock." And so it's a nice combined quality and growth stock selection process.

Jenna Dagenhart:

And of course there are different indexing methodologies within growth strategies. How does this fund compare to some of the others out there?

Jeremy Schwartz:

Also, this has been a year where there's been huge dispersion within the standard growth indexes. And you look at the major providers like Standard Poor's and Russell, they probably are the two most common benchmarks. And you look at sort of the decisions these index providers have for how they select stocks, and S&P, I did a piece in December talking about rebalance in the S&P family. They added momentum as one of their factors for selection. So what had strong momentum last year? Energy stocks, they're not your typical growth stock. And so what didn't have momentum last year was tech, the traditional growth stocks.

So what happened in the standard indexes is you had a lot of energy reduced tech. And then what's happened this year, you talked about the magnificent seven or the largest stocks driving the market, there's been almost 1,500 to 2,000 basis points of relative performance just in the first six months of this year between our quality growth index and ETF QGRW and the standard S&P growth index. So how you select stocks really matters. It's been been nice, we've been in the exact stocks leading the market higher, but it goes to the nuances of how do you create a methodology and knowing what's under the hood that can really matter in markets like this.

Jenna Dagenhart:

What makes QGRW especially relevant in this climate?

Jeremy Schwartz:

Well, I think you hear AI leading this story. This is not driven by AI, but all those stocks are in our top 10 holdings between the major tech companies, the Nvidias of the world, as well as just sort of the premier growth names today. So I think in a time where you see large cap growth leading huge QGRWs, 100 stocks, so it's a little bit more concentrated large cap growth basket, but it's combining, we think, long-term academic research on quality with these growth factors. And this year has been a great test to how we do in this sort of mega growth rally.

Jenna Dagenhart:

Finally, what type of investors should consider adding QGRW to their portfolio?

Jeremy Schwartz:

Well, people who are looking for alternatives, who maybe they've been a value investor for a long time and want to add in pockets of growth. This is a way of doing it with a quality factor added on. So if you're worried about the profitability of some of those unprofitable tech companies that were leading during the pandemic, this solves some of that. So combining those two factors of quality and growth characteristics, I think that's the place that people will find this a useful tool for.

Jenna Dagenhart:

Well, Jeremy, great to have you back on.

Jeremy Schwartz:

Thanks, Jenna.

Jenna Dagenhart:

And thank you for watching. Once again, that was WisdomTree Investments' Global CIO, Jeremy Schwartz. And I'm Jenna Dagenhart with Asset TV.