How to Quantify Quality in an ETF

Valuing high quality value is particularly important as bull markets enter their waning stages, as some market observers believe the current bull market is doing. In the early stages of bull markets, lower quality companies see their shares soar. However, as the bull matures, investors often exhibit a preference for higher quality fare with more compelling valuations.

Related: 3 High Octane Value Trades for a Bear Market

“In recent years high quality stocks have outperformed the S&P 500 index. These companies are by definition less risky and better equipped to survive tough economic periods. The stocks reflect this by typically exhibiting less volatility than the market as a whole. Quality reflects many of the ideals of legendary investor Warren Buffet which is buying ‘… wonderful companies at a fair price,” according to Investopedia.

For more information on Equity ETFs, visit our Equities category.

PowerShares S&P 500 High Quality Portfolio (NYSEArca: SPHQ)