GMO’s $8 Billion Fund Beats S&P 500 Even Without Nvidia, Tesla

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(Bloomberg) — Jeremy Grantham is a famous bubble hunter, quick to point out speculative excess on Wall Street and beyond. 

So it would seem like a surprise that the biggest mutual fund at his firm — GMO  — is betting on many of the so-called Magnificent Seven tech stocks that have surged so much this year that they may look, well, a little bubbly. 

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But to Tom Hancock, manager of the $8 billion GMO Quality Mutual Fund, there’s no contradiction per se: Hancock’s just following the firm’s recipe for investing in companies with solid track records. That’s driven the fund to an approximately 25% gain this year, outpacing the roughly 18% advance by the S&P 500 — even after it shied away from two of the benchmark’s biggest gainers, Nvidia Corp. and Tesla Inc.