Jensen's first passive ETF charges 0.25% for a 10-year profit test

Jensen Investment Management launched its first passive ETF on Wednesday, September 30. The Jensen U.S. Quality Index ETF —JQTY, listed on NYSE Arca, seeks to track an index of U.S. companies that have cleared a profit test, and it charges 0.25% a year.

The test is a gate, not a ranking. A company must earn a return on equity of at least 15% in each of the past 10 fiscal years. Return on equity is profit set against the money shareholders have in the business.

VettaFi, which calculates the index, prefers adjusted profit figures when it has them, ahead of the standard accounting result. Jensen said fewer than 315 U.S. companies met that mark at the launch.

The index starts from the 3,000-stock VettaFi US Equity 3000 and keeps the 100 largest qualifiers, measured by the market value of shares available to trade.

VettaFi's methodology weights each chosen stock by the square root of its market value, so a much larger company still gets more weight, just less than its size alone would give it. Jensen's September 30 release calls that a modified market-cap weight and says it is meant to moderate concentration in the largest holdings. The prospectus dated the same day describes a different rule: free-float market capitalization, the market value of shares available to trade.

The quality funds a buyer is most likely to already own do not use that gate. The iShares MSCI USA Quality Factor ETF AQUAL scores return on equity, steadier earnings and low debt inside each sector, so the mix stays near the broader market. It held $48.3 billion as of Monday, October 5.

JPMorgan's U.S. Quality Factor ETF AJQUA matches Russell 1000 sector weights, and the Invesco S&P 500 Quality ETF ASPHQ stays inside the S&P 500.

iShares lists a 0.15% expense ratio for AQUAL in the current prospectus. The August 31, 2026 fact sheet for AJQUA shows 0.12%. Invesco lists ASPHQ at a 0.20% total expense ratio and a 0.15% net ratio, under a contractual waiver through at least August 31, 2026.

Jensen's fee is 0.10 percentage points above the AQUAL fee and 0.13 percentage points above the AJQUA fee. It is 0.10 percentage points above the ASPHQ net ratio and 0.05 percentage points above the total.

Jensen already applies the 15% test in an active fund. The Jensen Quality Growth ETF CJGRW, launched in August 2024, is a portfolio of 25 to 30 U.S. companies chosen by the firm's managers, and it charges 0.57%. The same screen is now available rules-based for less than half that fee.

"Those who prefer a rules-based approach now have a transparent, tax-efficient way to own the largest companies that meet our standard, alongside our actively managed Quality Growth strategy," said Richard Clark, managing director at Jensen.

Jensen said the 10-year profit record shows up in the industry mix. As of June 30, before the fund launched, technology, industrials and health care together were more than 60% of the index, while financial services and utilities had a small weight. Those businesses, Jensen said, are more exposed to interest rates and regulation.

The premium over AQUAL and AJQUA, in our view, buys that mix rather than a sector target tied to the market.