A new fund targeting 'quality' stocks has been launched by the legendary value investor's firm.

Grantham's firm, GMO, is launching its first active ETF, the GMO U.S. Quality ETF, with a focus on high-quality stocks.

And he put GMO partner Tom Hancock in charge of it.

According to Hancock, there is a significant increase in interest in active ETFs compared to a few years ago, as evidenced by the enthusiasm of clients. The tax benefits are a contributing factor, but even institutional clients appreciate the ease of trading them.

The new ETF is designed to invest in companies that can sustainably allocate capital and generate high returns, with a focus on technology, healthcare, and consumer goods.

As per GMO's website, on November 17th, the ETF's top holdings were , and .

These companies have unique strengths and strong financials, making them battleships that will remain significant in the future.

While Microsoft has experienced a 54% increase in stock performance this year, UnitedHealth's shares remain virtually flat, and Johnson & Johnson has seen a decline of over 15%.

‘Better chance at outperformance’

Nate Geraci, ETF Store President, views active ETFs as a natural progression in the industry.

According to Geraci, an active manager trying to achieve after-tax alpha can face a higher hurdle. However, an ETF wrapper can increase the chances of outperformance.

He adds ETFs can give active managers a better chance at long-term success.

The GMO U.S. Quality ETF has experienced a growth of less than 0.5% since its Wednesday launch.