QGRO's reset sold Nvidia and made Lockheed Martin a 3.5% bet

American Century's U.S. Quality Growth Index dropped Nvidia and lifted Lockheed Martin in the same end-of-September rebalance, a pairing that says more about the screen than about the market.

The ETF that tracks it, QGRO, charges 29 basis points and screens U.S. companies for income, equality and growth using sales, cash flow, profitability and other measures. The methodology splits the portfolio into two sleeves—35 to 65 percent of assets in stable-growth companies, 30 to 65 percent in high-growth names—both of which moved at the September reset.

In the stable-growth sleeve, the index added Amazon at a 3 percent weight and removed two holdings, the New York Times Company and Nvidia, while Lockheed Martin posted the sleeve's largest increase, rising from 0.25 percent to 3.5 percent. Among high-growth names, the index added Booking Holdings at 3 percent, Medpace at 1.5 percent and SharkNinja at 0.9 percent.

Presented as a look into manager thinking, the rebalance reads as noise: out of an AI mega-cap the fund had parked in its stable sleeve, deep into a defense prime, into a travel platform and an appliance maker. Read as the output of a screen, it is legible. An exit from Nvidia is what happens when profitability and cash-flow tests stop ranking it, and Lockheed's raise is arithmetic applied to whatever the model now scores higher. The rules did the trading.

That distinction matters for the label. A portfolio that can keep two-thirds of its assets in stable-growth names, carries a 3 percent line in Amazon, and whose boldest move was a defense contractor is a core equity fund wearing a growth name. The published sleeve floors are loose, too: one at 35 percent, the other at 30, leaving as much as a third of the portfolio outside both buckets and making the index—not a stock picker—the live decision.

Quality labels have a habit of producing sector outcomes, as this publication wrote of OUSM's screen, and a defense line at 3.5 percent is the next test of that. The article's own disclosure credits VettaFi as QGRO's index provider and says it collects licensing fees, while the tracked index carries American Century's name and the ticker ACQGRO; the coverage does not reconcile the two.

The fund has returned 19.6 percent over the last three years, ahead of the ETF Database Large Cap Growth Equities category average in that stretch, according to the article. That is a fair number for a rules-based product charging under a third of a percent, and it is the honest case for a mechanical screen: it sells what the crowd owns without calling a meeting. The line to watch at the next reset is Lockheed's 3.5 percent, and whether a fund named Quality Growth keeps a defense prime near the top of its stable sleeve or treats September as an accident.