Opinions
Larry Berman CFA, CMT, CTA
BMO MSCI USA High Quality ETF
ZUQ-T
WAIT
May 05, 2025
Stock price when the opinion was issued
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An ETF that invests in companies with very, very high quality aspects, whether it is from earnings or dividends, as well as real quality by S&P Research. The flip side is that some of the names are a bit lofty in terms of valuations. He likes this because there is a shift towards higher-quality names. As you move into the later stages of the stock market economy the large cap high-quality names tend to do better than the lower quality names.
The fund is saying that they have taken the S&P500 and dropped off lower quality stocks. It has many big tech companies. If you didn't own it, he wouldn't buy it. He would prefer EQL, which has risk that is spread over.
Likes the quality space. Apple, Microsoft, Visa, JNJ, Mastercard. A US version is coming out soon. QUAL tracks the same thing, but in US funds, with a MER of 15 bps.
Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. A growth to value shift is difficult to predict with certainty. Tech does not have to slow down post covid, and if global growth does not ramp up, investors will still be willing to pay a premium for growth. Unlock Premium - Try 5i Free
Great that the viewer is starting her son out early. Years of compounding growth is the best thing that any investor can do.
For anything that's related to just the S&P 500, you really need to know what you're buying. Make sure you diversify beyond the top 10 S&P names. Perhaps VGG, where you still get exposure to tech but more dividend appreciation. Another approach is to look at ETFS that focus on quality, such as QUAL or ZUQ among other names. These two screen for strong ROEs and low leverage.
Typically you'll get a lot of big-cap tech in this. Loves the exposure and quality as a factor (one of his favourites). Recent lows would've been a better buy than today. Don't chase here with new money, as there's a chance we revisit April lows if we get a harder economic landing (which could take several quarters to figure out). If we revisit those lows, buy then and be happy in 4-5 years.