Virtus Terranova U.S. Quality Momentum ETF (JOET)

As the Virtus Terranova U.S. Quality Momentum ETF (JOET) celebrates its five-year anniversary, creator Joe Terranova discussed his strategy for picking stocks. Terranova also shared his vision of creating a suite of related ETF products.

Virtus Terranova U.S. Quality Momentum ETF is a passively managed ETF with a portfolio of 125 large-cap names sporting strong momentum and quality characteristics. JOET has underperformed the S&P 500 index since my August article. Since the beginning of the year, it has trailed IVV and FQAL. Introduced in 2020, from December 2020 to October 2025, it underperformed IVV and a few quality-focused ETFs, though it did beat RSP.

The Virtus Terranova U.S. Quality Momentum ETF has a portfolio of 125 large and mid-cap stocks blending quality, momentum, and equal-weight methodology. JOET offers attractive value and growth metrics with a notable overweight in financials, but its allocation shifts with sector trends. Long-term simulation of the strategy points to outperformance relative to the S&P 500, but JOET has lagged the benchmark and most competitors.

JOET is a passively managed ETF offering exposure to 125 large-cap momentum stocks with robust quality. While JOET has delivered solid YTD performance, its total return since inception is still weaker than IVV's and those of a few quality-focused ETFs. JOET delivers robust quality and momentum characteristics, but IVV's holdings offer stronger revenue growth and capital efficiency.

The Virtus Terranova US Quality Momentum ETF (JOET) combines quality and momentum strategies, but its mid-cap bias leads to below-average profitability and higher volatility. JOET's allocation skews towards financial services and industrials, with significant underweights in technology and consumer discretionary compared to the S&P 500. Valuation is slightly below the S&P 500, driven by low-multiple financial services, but profitability metrics lag due to limited exposure to highly profitable mega caps.

Joe Terranova, Senior Managing Director for Virtus Investment Partners, and Bryn Talkington, Managing Partner of Requisite Capital Management, joins CNBC's "Halftime Report" to detail their latest portfolio moves.

I have a hold rating on JOET due to its sound strategy, low cost, and solid chart, yet it has underperformed other momentum funds. JOET focuses on U.S.-listed large-cap companies with strong quality fundamentals and positive momentum technical trends, but its relative returns have been lackluster since early 2024. The ETF currently has a mixed exposure to mid- and large-cap stocks, with significant weight in Information Technology, Financials, and Industrials, but lacks defensive holdings.

Virtus Terranova U.S. Quality Momentum ETF is a passively managed ETF focused on promising stocks at the intersection of quality and momentum. JOET has outperformed the S&P 500 since my June article, yet longer-term returns remain disappointing, weighing on my sentiment. With about 41% of the portfolio replaced, the Fund remains a high-quality vehicle.

Quality-based portfolios are still attractive amid an economic slowdown, with Virtus Terranova U.S. Quality Momentum ETF offering exposure to high-quality companies with strong relative performance. The JOET fund struggles to keep up with the S&P 500 and other quality ETFs due to its equal-weighted allocation and its underweighting of profitable mega caps, but may benefit from a market sentiment shift favoring mid-cap companies. JOET's sector allocation shows an overweighting of financial services and industrials, and an underweighting in communication services, healthcare, technology, and consumer staples compared to S&P 500 and quality ETF peers.

JOET is an index-based ETF that amalgamates two potent factors, namely momentum and quality, targeting mega- and large-caps. Despite looking promising, JOET has underperformed the S&P 500 ETF and a few quality ETFs since its inception in November 2020. Downside and upside capture were also unsatisfying. At the same time, its portfolio has excellent quality that comes with solid growth and momentum exposure.

The Virtus Terranova U.S. Quality Momentum ETF seeks to track the Terranova U.S. Quality Momentum Index, focusing on large-cap US companies with strong quality fundamentals and positive momentum trends. The ETF is well-diversified across various sectors, with a heavy mid-cap allocation, providing a tilt towards smaller companies without the risk of small-cap stocks. The ETF's strategy is technical and retrospective, potentially overlooking qualitative risk factors, but it offers attractive risk-adjusted returns and a solid risk management approach.

Virtus Investment Partners has transferred the Virtus Terranova U.S. Quality Momentum ETF (NYSE Arca: JOET) from the Nasdaq to the New York Stock Exchange. JOET strives to deliver exposure to U.S.-listed large-cap companies that combine strong quality fundamentals with positive momentum technical trends.

Virtus Terranova U.S. Quality Momentum ETF holds 125 large and mid-caps screened on quality and momentum. It is well-diversified across sectors and holdings.

Investors are flocking to artificial intelligence (AI) ETFs, as well as short-duration Treasuries ETFs and zero-fee core equity exposure, reveals recent advisor research data.

Virtus Terranova U.S. Quality Momentum ETF's quality overlay significantly reduces momentum crash risk. Excess returns are no fluke, as this exchange-traded fund hosts a cutting-edge strategy.

JOET picks large-cap companies with a ranking system based on trend, profitability, and growth. It follows an equal-weight methodology.