ETF Education Report: GMO U.S. QUALITY ETF (QLTY)

What this ETF is trying to do

The GMO U.S. Quality ETF (ticker: QLTY) is an exchange-traded fund that focuses on U.S. companies. While the specific strategy isn't detailed in the data, it holds a variety of large companies across different industries.

What the numbers show

When looking at how this ETF has performed, it is important to look at two different types of returns: price return and total return.

• Price Return: This measures only the change in the share price. For the past year, the one-year price return was approximately 17.84%. Year-to-date (YTD), the price return was approximately 13.55%.

• Total Return: This includes the share price change plus any cash distributions (dividends) paid out. The one-year total return was approximately 18.68%, and the YTD total return was approximately 14.11%.

To give you an idea of the price movement, the current price is $43.67. The estimated price from roughly one year ago was approximately $37.06.

Income and distribution explanation

Some investors look for ETFs that pay out cash, known as distributions. This ETF has a distribution yield of approximately 0.65%. Over the last 12 months, it made 4 distributions. These payments usually happen on a quarterly basis, often on Tuesdays.

It is important to remember that a distribution yield is not the same as total return. While distributions provide cash, they are only one part of how an investment performs overall.

NAV erosion explanation

"NAV erosion" is a term used to describe when the value of an ETF's underlying assets declines significantly. StockValueFinder uses an "erosion-risk score" to help monitor this. For QLTY, the erosion score is 100, which is labeled as "No price erosion detected." There is no severe erosion-risk flag for this ETF.

Top Holdings

The following are the top holdings in this portfolio (note that this is a partial list):

• Microsoft Corp (7.79%)

• Alphabet Inc Class A (4.86%)

• Apple Inc (4.55%)

• Johnson & Johnson (4.38%)

• Thermo Fisher Scientific Inc (4.13%)

• Lam Research Corp (3.84%)

• Meta Platforms Inc Class A (3.76%)

• Broadcom Inc (3.73%)

• Amazon.com Inc (3.61%)

• Salesforce Inc (3.42%)

Please keep in mind that holdings can change over time.

Pros

• The ETF has shown positive price returns and total returns over the last year.

• The erosion-risk measurement is rated as "good."

Cons

• Total return data for the three-year period was not supplied.

• The distribution yield is relatively low compared to some other types of income-focused funds.

Beginner takeaway

When studying an ETF like QLTY, always look at the total return rather than just the price change to see the full picture. Also, remember that while distributions provide cash, they do not guarantee that the share price will stay the same.