n a recent episode of Behind the Ticker, John Davi, founder and CIO of Astoria Advisors, discussed the firm's latest ETF launch, the Astoria US Quality Kings ETF (ticker: GQQQ). With over two decades of experience in quantitative investing and asset allocation, Davi founded Astoria in 2017, building a firm focused on macro-driven and quantitative investment strategies. Managing approximately $2 billion in assets, Astoria serves financial advisors, institutions, and ultra-high-net-worth individuals.Davi explained that GQQQ was created to address a gap in the growth investing space. While many existing growth ETFs are purely market-cap weighted, GQQQ combines growth with a quality filter, ensuring exposure to high-growth companies while maintaining fundamental financial strength. Unlike broad Nasdaq-based ETFs, which include all non-financial large-cap stocks without quality screening, GQQQ applies quantitative selection criteria focusing on return on equity (ROE), return on assets (ROA), and return on invested capital (ROIC). This results in a portfolio that captures growth opportunities while reducing exposure to weaker companies.The ETF blends large-cap and mid-cap stocks, aiming to identify the next generation of market leaders. Davi highlighted AppLovin as an example—GQQQ included the stock in its launch portfolio in October 2023, months before it was added to the Nasdaq 100, allowing early participation in its strong performance. By including mid-cap growth names, GQQQ seeks to capitalize on emerging winners while mitigating the concentration risks seen in traditional growth ETFs dominated by the "Magnificent Seven" mega-cap tech stocks.Davi also emphasized the risk management strategies within GQQQ. The ETF undergoes an annual rebalance with quarterly quantitative reviews, allowing for adjustments when stocks significantly de-rank in quality metrics. While not a adaptive allocation product, this process ensures that the fund remains aligned with its quality-growth mandate. He positioned GQQQ as a complementary holding to existing growth ETFs like QQQ or Vanguard's growth ETFs, offering a more refined and risk-conscious approach to growth investing.For advisors and investors looking to incorporate GQQQ into their portfolios, Davi suggested it as a way to diversify traditional growth exposure, especially given the heavy concentration in a few stocks within broad-market growth indices.
Deeper Dive: Insights from the Full Conversation
Beyond the headline strategy, the full conversation between Brad and John Davi covered several additional themes worth highlighting for advisors and investors.
On Process and Philosophy
So it can go into midcap. Makes an interesting case of finding some quality in value with their screening process. And might have a little bit of different names in flavor, ultimately trying to offer growth. Also lower some risk because the multiple is going to be a little bit lower than what you're seeing on the Nasdaq. And ultimately the goal is to increase the sharp ratio as well.
So our tech sector weight, you're going to be very similar to, I mean, it's going to be in between spies and cues. So it's like 45% tech, 14% communication, and then communication services, and the continuous session is 13%. But the difference would be that we may have stocks that are lower in market capital compared to like spies and cues. Based on a sense to me. So I was actually, I was, I had the, the pleasure of being on Schwab network this morning, actually, after, well, I'm waiting to get on.
Market Context and Positioning
But in our state of goal, in our multi-ass portfolios is to get, like, 150 basis points to 100 above bench. And, you know, we've had good returns and historically, and our SMAs. And even if you look at, like, PPI, the first ETF we launched, you know, it's in the second percentile over the last three years at, like, 330 funds in our category. Even our other ETF, R-O-E, last year was its first full count on the year, and it was in the 12 percentile out of, like, 1100 funds.
I've been watching your growth. Specifically in those two ETFs that you launched first. So congratulations on all your success. And you have recently launched a new ETF, which is why you're here. So can you tell me, you know, what really inspired the creation of GQQQ? I'm going to call it GQs. And what gap in the market you're looking to fill there.
So, you've mentioned tech a few times. So does G triple Q's have other sector diversification in it, or is it mean, or is it pretty much just focused on on the tech sector, or are you, are there other sectors that you're playing in? And do you have any guardrails on that sector exposure, or you just leave it down to the process? Okay, so that we try and take the midpoint between spies and cues. And we want this thing to kind of, it's the goal.
Today we have on John Dovey from Astoria Advisors. He's a frequent recurring guest on this show and today we're talking about their third listing GQQQQ or C calls that the G triple Q's or as I'm calling it the GQ's. We'll work it out, you guys will figure out what you want to call it. But anyways, it is the Astoria U.S. They're trying to find more of those quality names inside of growth, not just in the Nasdaq 100 in large cap growth.
Notable Insights
"But the difference would be that we may have stocks that are lower in market capital compared to like spies and cues."
"So, you know, we'll talk about, you know, I want to kind of talk about this in terms of the difference between GQs and triple cues and, you know, just passive ETFs."
Key Takeaways
- While many existing growth ETFs are purely market-cap weighted, GQQQ combines growth with a quality filter, ensuring exposure to high-growth companies while maintaining fundamental financial strength.
- The conversation explores important themes in portfolio construction relevant to today's advisor landscape.
- The conversation explores important themes in risk management relevant to today's advisor landscape.
What This Means for Advisors
For financial advisors evaluating options for client portfolios, this conversation with John Davi highlights important considerations around quantitative investing. Understanding the strategy behind each fund—not just the ticker—helps advisors make more informed allocation decisions and better communicate the rationale to clients.
The themes of quantitative investing and portfolio construction discussed in this episode are particularly relevant in the current market environment, where advisors are increasingly looking for differentiated solutions that go beyond traditional benchmarks.
Listen to the Full Episode
This article is based on an episode of Behind the Ticker, hosted by Brad Roth, Founder and CIO of THOR Financial Technologies. For the full conversation with John Davi, including additional nuances and details, listen on Spotify, Apple Podcasts, or watch on YouTube.