Jensen Investment Management Debuts Rules-Based U.S. Quality Index for Long-Term Profitability

Quick Summary

The Jensen U.S. Quality Index (JQUI) is a new rules-based benchmark that identifies elite U.S. companies maintaining a 15% return on equity for ten consecutive years. This rigorous screening process filters thousands of stocks down to a high-conviction universe of consistently profitable market leaders.

How Does the Jensen U.S. Quality Index Identify Market Leaders?

The Jensen U.S. Quality Index employs a strict decadal profitability screen to ensure only the most resilient businesses are included. Unlike traditional benchmarks that rely on recent performance snapshots, this methodology requires a 15% ROE minimum sustained over ten fiscal years. This approach effectively eliminates companies with volatile earnings or those benefiting from short-term market anomalies.

• Strict ROE Threshold: Only companies hitting 15% return on equity for 10 straight years qualify.
• Elite Universe: Fewer than 315 companies out of thousands currently meet the criteria.
• Market Cap Weighting: The index selects the top 100 qualifying firms by free float market capitalization.

What Industries Dominate This High-Quality Benchmark?

By focusing on consistent business quality, the index naturally gravitates toward sectors with high barriers to entry and sustainable margins. As of mid-2026, the technology, industrials, and healthcare sectors represent over 60% of the total index weight. Conversely, sectors highly sensitive to interest rate fluctuations, such as financial services and utilities, remain significantly underrepresented due to the strict ROE requirements.

• Sector Stability: Reduced turnover compared to traditional growth or value indices.
• Modified Weighting: A specialized methodology prevents excessive concentration in mega-cap holdings.
• Independent Administration: The index is calculated and managed by VettaFi to ensure transparency.

FF NEWS TAKE:

The launch of the Jensen U.S. Quality Index moves the needle by codifying "quality" into a transparent, rules-based format. In an era of volatile markets, Jensen’s ten-year profitability requirement offers a sophisticated alternative to shallow factor-based ETFs. By prioritizing long-term capital efficiency over short-term momentum, Jensen provides institutional and retail investors with a robust framework for identifying true compounding machines in the U.S. equity market.