Jensen files for index-based quality ETF at 25 bps

Jensen Investment Management filed with the Securities and Exchange Commission for a new index-based quality exchange-traded fund that would charge 25 basis points. The fund would screen for companies reporting at least 15% annual returns for 10 consecutive fiscal years and hold the 100 largest qualifying names.

The filing says the ETF will track the Jensen U.S. Quality Index and use a non-discretionary, rules-based methodology. The index would start from the VettaFi U.S. Equity 3000 Index, apply the 15% annual return test over a 10-year period, rank surviving firms by market capitalization, select the top 100, and weight constituents by free-float market cap.

The filing states the fund does not yet have a ticker. Jensen currently offers active products such as the Jensen Quality Growth ETF (JGRW); the proposed fund is a passive, index-based product.

Comparable funds that use VettaFi-linked indexes include the American Century U.S. Quality Growth ETF (QGRO), which charges 29 basis points and follows an American Century quality growth index, and the American Century Quality Diversified International ETF (QINT), which charges 34 basis points. The VictoryShares Free Cash Flow ETF (VFLO) charges 39 basis points, uses free cash flow as its selection criterion and has a year-to-date return of 21.9%, according to ETF Database data.

The filing clarifies VettaFi’s role: VettaFi is the index provider and receives licensing fees, but it is not the issuer, sponsor, endorser, or seller of ETFs that track its indexes and does not have obligations related to their issuance or trading.

The SEC must complete its review and a ticker must be assigned before the ETF can list and begin trading.