On October 1, 2025, GMO launched the GMO Domestic Resilience ETF (DRES), bringing the firm’s time-tested quality-focused investment discipline to a distinctly contemporary challenge: identifying companies positioned to benefit as manufacturing, defense production, and critical supply chains return to U.S. soil. DRES represents GMO’s bet that reshoring and nearshoring—the movement of production capacity back onshore or to nearby allies—constitutes more than political theater or a temporary supply-chain correction. The fund targets sectors at the heart of this shift: manufacturing and automation, transportation and logistics, energy and materials, and defense. It’s apt to hold 30-40 stocks with high sector concentration.
The investment case
The investment case for domestic resilience rests on three converging forces. First, massive policy commitments: the CHIPS and Science Act, the Infrastructure Investment and Jobs Act, and the Inflation Reduction Act, together represent hundreds of billions in federal support for domestic industrial capacity. Second, genuine corporate action: major manufacturers from semiconductor fabricators to pharmaceutical producers have announced multi-billion-dollar U.S. facility expansions, motivated by supply-chain vulnerabilities exposed during COVID-19 and rising geopolitical tensions. Third, structural cost shifts: while U.S. labor remains expensive relative to offshore alternatives, automation and the narrowing wage gap with China make domestic production increasingly viable for certain industries. Whether this represents the “start of a new era of reindustrialization,” as some analysts suggest, or a more limited adjustment to specific supply-chain risks, remains to be seen. What’s clear is that announced commitments run into the trillions, giving the thesis substance beyond political rhetoric.
GMOs strategy
GMO’s approach to this opportunity leverages the firm’s 40-plus years of experience in quality investing, research pioneered in the 1980s by co-founder Jeremy Grantham. The Focused Equity team, led by Tom Hancock, applies the same discipline that has driven GMO’s U.S. Quality strategy: identifying companies with strong profitability, stable earnings, and sound balance sheets, then assessing whether current market prices offer attractive entry points. Dr. Hancock, a GMO partner since 1995 with a PhD in Computer Science from Harvard, has built a substantial track record applying this framework. The firm’s GMO Quality IV fund (GQEFX) has a five-star / Gold rating from Morningstar and $12 billion in assets, while the U.S. Quality ETF (QLTY) has $3 billion after two years of operation. Both funds have, to put it gently, pretty much clubbed their peers with top 1% to top 10% returns over the longer term.
For DRES, this process gets applied to a more concentrated universe: companies with high U.S. revenue exposure in sectors central to reshoring. The fund will be, in GMO’s words, “far more concentrated and more U.S.” than traditional equity benchmarks. Quality (45 stocks), US Quality (36), and Domestic Resilience (36) are all notably concentrated, with the senior fund, GMO Quality, having below-average risk scores over the past 3-, 5-, and 10-year periods. If the reshoring thesis plays out over the next 3-5 years, a focused portfolio of industrial beneficiaries should outperform. If policy support wavers or, to be blunt, Trump loses interest, cost disadvantages persist, or the announced projects fail to materialize at scale, that same concentration becomes a liability. The fund’s sector tilts (heavy industrials, cyclical materials, capital-intensive energy infrastructure) also mean higher sensitivity to economic cycles than a diversified quality strategy.
The bottom line
DRES charges 0.50% annually, entirely reasonable for an actively managed ETF. The GMO discipline is sensible and wins a lot over time. Mr. Hancock seems exceptional at his job.
That having been said, this remains a tactical bet on a policy-dependent industrial trend.
DRES functions as satellite positioning, not core equity exposure. An investor who believes the reshoring thesis has genuine multi-year tailwinds, values GMO’s disciplined approach to stock selection, and can accept concentration risk in cyclical sectors owes it to themselves to put DRES on their shortlist for further research. The fund offers a thoughtful implementation of a compelling theme, but you need to realize that you’re making simultaneous bets on manager skill (which is demonstrable) and political and macro-economic developments, sustained policy support, corporate follow-through, and favorable economic conditions for capital-intensive industrial investment, which are far less certain. It will, I think, prove a worthwhile tactical holding for portfolios that can accommodate sector concentration and are positioned to benefit from domestic reindustrialization, if that reindustrialization materializes as promised.
