Why This ETF Went From AI Bear to AI Bull in 4 Months

In the summer of 2026, GQG US Equity ETF GQGU looked like a bunker. More than a third of the portfolio sat in regulated utilities and oil producers, with the rest in insurers, tobacco companies, and telecom giants—the kind of steady, dividend-paying businesses investors buy to brace for a storm. It owned no information technology.

Four months later, the same fund burst out of the shelter. Technology had gone from zero to 58%, the exchange-traded fund’s largest allocation by a wide margin—and even that understates the shift. Recently bought holdings like Alphabet GOOGL, Amazon.com AMZN, Meta META, and Space Exploration Technologies SPCX elude the official tech classification, yet they rise and fall on many of the sector’s same forces. The utilities were gone, as were ExxonMobil XOM and Chevron CVX. Only two holdings from its midyear portfolio survived the turnover.

For a firm that had spent the previous year publicly warning that artificial intelligence looked like the “dot-com bubble on steroids,” the reversal was jarring. It was also entirely on brand for GQG.

Forward-Looking Quality, and a Willingness to Change Course

Fort Lauderdale, Florida-based GQG Partners, founded in 2016 by Rajiv Jain, managed around $160 billion as of mid-2026. Jain, the firm’s chairman and chief investment officer, describes his approach as buying “forward-looking quality at sensible prices”—financially sturdy, reliably growing businesses bought at reasonable prices. His goal is to lose less than the market when it’s down.

What really distinguishes the strategy, though, is its willingness to tear up the portfolio when the facts, or the team’s thinking about them, change. “Everything is temporary,” Jain said in a 2021 podcast, “and the only way to survive long term is to be adaptive.” Rather than wait for a company’s fundamentals to deteriorate, he says he prefers to “force rank every name every day.” The result is a fund that can look nothing like its benchmark, and nothing like it did a year earlier.

From ‘Dot-com on Steroids’ to All-In

The portfolio has a record of restlessness. The technology weighting in the strategy, which closely resembles the older mutual fund GQG Partners US Select Quality Equity GQEIX, has swung dramatically over the years, and the most recent swing is among the sharpest yet. Information technology climbed to nearly half the portfolio in early 2024, then fell steadily to about 22% by that year’s end, 5% by the spring of 2025, and zero by early 2026. Though GQG briefly picked up select software names in 2026’s first few months, it purged them shortly thereafter. Energy and consumer staples rose in tech’s place.

Jain retreated from tech with trumpets blaring. In a series of research pieces beginning in September 2025, GQG wrote that “for the first time in our firm’s history” many large technology companies represented “backward-looking quality,” a pointed phrase from a shop that boasts it can find the forward-looking kind. It asked clients a deliberately uncomfortable question: “How much of your net worth do you want invested in a cyclical sector” showing “growth deceleration, free cash flow margin deterioration, and increasing competition?” By early 2026, the firm was warning that the debt financing the AI data center boom was beginning to crack.

Then it changed its mind. In recent commentaries and webinars, the firm argued that AI had evolved “from a capital expenditure story into an earnings and monetization story.” The rental price of AI chips was climbing instead of slipping, a sign that demand was outrunning supply. Alongside accelerating enterprise adoption driven by agentic AI, some of the big cloud-computing providers said their AI data centers were earning back what they cost in as little as one to two years. What had looked like a peaking cycle, the firm concluded, was starting to look like a supercycle—and it intends to own these names until the data says otherwise.

That conviction was evident fast in the ETF. By late October 2026, semiconductors it avoided in June were its largest industry exposure at 23% of assets—Nvidia NVDA, Micron Technology MU, Lam Research LRCX, Intel INTC, Advanced Micro Devices AMD, ASML Holding ASML, Broadcom AVGO, and Marvell Technology MRVL. Software made up another 16%, led by Microsoft MSFT and Palantir PLTR. Add Alphabet, Meta, and Amazon, and businesses tied to technology and internet platforms accounted for nearly three-quarters of the portfolio.

The mutual fund version discloses its portfolio far less often than the ETF, so its most recently disclosed holdings, from June 30, still looked defensive. But the firm runs both the same way, so the mutual fund’s current portfolio most likely looks much the same.

Conviction Has a Price

Many of Jain’s previous bold, contrarian shifts looked prescient. The team’s move out of technology and into energy starting in 2021 sidestepped the worst of the subsequent year’s selloff; GQG Partners US Select Quality Equity notched one of the Morningstar Category’s best results in 2022. But where Jain had seen something the market hadn’t in past pivots, this time he looks like he’s catching up to a big opportunity he missed.

The firm’s all-or-nothing conviction often produces feast-or-famine results. GQG Partners US Select Quality Equity followed that 2022 triumph with a top-4% showing in 2024, then finished dead last in its category in 2025, falling as the market rallied. It has stayed near the bottom in 2026, up only about 3% for the year to date through Oct. 27 as the Morningstar US Large Cap Index climbed nearly 17%.

The pattern is even starker at higher frequency. The fund’s rolling three-month category ranking—how it placed against peers over each successive three-month window—has lurched repeatedly from the very top to the very bottom: near the floor through most of 2025, briefly best-in-class in early 2026 as AI names wobbled, then back to the bottom by midyear as they recovered. There were tentative signs the pivot was starting to pay off, though: As GQG rebuilt its technology stake over the third quarter, the fund’s three-month ranking climbed from the bottom of its category in July to the top decile by September. Its investors are rarely in the middle of the pack.

The Bottom Line

GQG’s recent portfolio overhaul magnified risks in more ways than one. Where the strategy once spread its bets across fundamentally different businesses in utilities, staples, insurers, and tobacco, it now owns a cluster of companies whose fortunes could fall in tandem if investors sour on AI spending, or if rising interest rates make investors less willing to pay up for profits that lie years away.

The fortunes of the strategy, whose concentration in its largest five stocks climbed to roughly 41% from 30% in June, now rest on whether AI spending keeps earning the returns GQG says it sees. If those projections fall short, there is little defensive ballast left to buoy the fund.

Then again, nothing says Jain won’t reverse course again.