Tema Durable Quality ETF (TOLL) seeks to track companies with superior quality characteristics, focusing on businesses with high return on equity, stable earnings growth, low debt-to-equity ratios, and consistent profitability metrics. This quality-focused equity ETF targets financially robust companies across market capitalizations.
How It Works
TOLL employs an active management approach using proprietary quality screens to identify companies with durable competitive advantages and strong financial metrics. The fund evaluates potential holdings based on profitability ratios, balance sheet strength, earnings consistency, and management efficiency. Portfolio construction emphasizes concentrated positions in 30-50 high-conviction quality stocks, with quarterly rebalancing to maintain quality standards and optimize risk-adjusted returns across sectors.
Key Features
- Active quality screening process targets companies with ROE above 15% and debt-to-equity ratios below industry averages
- Concentrated portfolio of 30-50 high-conviction positions allows for meaningful exposure to best quality opportunities
- Recently launched in May 2023, offering 1.83% dividend yield from quality dividend-paying companies
Risks
- This ETF can lose value if quality stocks fall out of favor, as growth and momentum strategies may outperform during market rallies
- Concentrated portfolio of 30-50 holdings creates single-stock risk where individual company problems can significantly impact overall performance
- Quality stocks typically decline 20-30% during broad market downturns, though they often show more resilience than growth stocks
Who Should Own This
Best suited for long-term investors with 3-5 year time horizons seeking quality exposure as a core or satellite holding (10-25% of equity allocation). Medium risk tolerance required due to equity volatility and concentration risk. Ideal for investors prioritizing dividend income and defensive characteristics over pure growth potential.