Jensen Investment Management has launched its first passive ETF, the Jensen U.S. Quality Index ETF (NYSE:JQTY), tracking the Jensen U.S. Quality Index.

The fund applies a stringent quality screen. Companies must have generated at least 15% return on equity (ROE) in each of the previous 10 fiscal years. Jensen says fewer than 315 U.S.-listed companies currently meet the requirement.

JQTY then selects the 100 largest qualifying companies by free-float market capitalization, using a modified market-cap weighting methodology designed to moderate concentration in its biggest holdings. The index is reconstituted and rebalanced twice a year.

"A single strong year doesn’t tell you whether a business is built to last," said Allen Bond, Jensen’s head of research and portfolio manager. "JQTY is built on it."

JQTY joins Jensen’s actively managed Jensen Quality Growth ETF (NYSE:JGRW), launched in August 2024. Both funds draw from Jensen’s Quality Universe.

QUICK CONTEXT: Jensen Takes Its Quality Play Passive

JQTY brings Jensen Investment Management’s long-running quality-growth framework into a rules-based ETF. Rather than screening companies based on a single period of profitability, the strategy requires a 15% or higher ROE for 10 consecutive fiscal years, creating a relatively narrow universe of companies with a long record of profitability.

The ETF then narrows that universe to 100 of the largest qualifying U.S. companies. Its modified market-cap weighting is intended to retain exposure to large market leaders while limiting concentration in the biggest positions.

The launch expands Jensen’s ETF lineup beyond its actively managed JGRW, giving investors a passive vehicle based on the same underlying Quality Universe. The index will be independently calculated and administered by VettaFi and rebalanced semiannually.

Photo: Shutterstock