American Century’s QGRO caps holdings at 3.5% to limit risk

Sandra Testani, American Century’s head of ETF product and strategy, told attendees at this week’s Investment Company Institute conference that the American Century U.S. Quality Growth ETF (QGRO) limits any single security to a maximum weight of 3.5% to curb concentration risk.

QGRO tracks an index that screens companies for factors including quality, income, cash flow and growth. The index weights stocks using those fundamental measures rather than pure market capitalization, combining stable growers with higher-growth names.

Testani noted the 3.5% cap reduces heavy exposure to a handful of megacap firms. She said the fund can lag when large-cap stocks surge but provides “strong downside protection” when those stocks fall.

The ETF returned about 19.6% over the past three years and has an expense ratio of 29 basis points. Its performance over that period surpassed the large-cap growth category average.

Company representatives said the ETF structure’s transparency, tax efficiency and tradability have enabled strategy designs that differ from market-cap benchmarks. VettaFi serves as the index provider for QGRO and receives a licensing fee; VettaFi is not the issuer, sponsor or seller of the fund and has no obligation or liability related to the fund’s issuance, administration, marketing or trading.