Virtus Terranova US Quality Momentum ETF

JOET

Market cap $231M

The Terranova U.S. Quality Momentum Index filters securities based on positive technical momentum and then ranks them by measures of fundamental quality. The fourth quarter provided continued evidence of a healthier investing environment relative to the narrower market opportunities of the prior two years. During the fourth quarter, the S&P 500® Index ('SPX') posted 13.2% earnings growth and 8.3% revenue growth.

The Virtus Terranova U.S. Quality Momentum ETF combines quality and momentum factors with an equal-weighted approach, targeting broad-based quality momentum rallies. JOET's methodology underperforms in most regimes, failing to outperform pure quality, pure momentum, or even equal-weighted broad market alternatives like RSP. The ETF's sector allocation is pro-growth and cyclical, but requires a rare, simultaneous alignment of broad momentum, quality leadership, and supportive macro conditions.

In the third quarter, the capital markets provided compelling evidence that a much healthier investing environment exists in 2025 relative to the narrowed market opportunities. For the quarter, JOET posted a total return of 5.12% at NAV versus the Index's return of 5.24%. Sector allocation was a detractor from performance over the quarter, relative to the broader market, as measured by the S&P 500® Index.

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.

Joe Terranova, senior managing director at Virtus Investment Partners, joins CNBC's "Halftime Report" to explain why he's adding more crypto exposure to his ETF.

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.