While investors are flocking to safe haven assets like bonds, there’s still a need for products that capture the upside potential in U.S. equities. At the same time, however, there’s also a need for strategies that offer downside protection built into the product.

“When you think about profitability, financial risk, earnings quality–seeing those consistent profits coming through–stocks like that will not only be able to capture upside, but also if the markets go down, they tend to do very very well,” said Josh Rogers, Beta Specialist at JP Morgan Asset Management..

As a result of 2018’s bull market run, the quality factor often goes overlooked compared to growth and value, but with market volatility still a primary consideration and many investors favoring defensive sectors, quality stocks and the related ETFs are worth examining in 2019.

Even during the volatile moments of the market, investors were quick to react to news–trade wars, inverted yield curves and now government shutdowns. It’s the type of noise that muddies the minds of investors and disconnects them from the fundamentals of an asset.

As a result, value investing overall is making a proverbial comeback in the markets.

“Speaking of value, I would also say though that for investors who actually are looking for a true kind of play in the factors space,” said Rogers. “We’ve been talking a lot about value. It’s been beaten down pretty hard, a lot of people see the relative valuation as an opportunity going forward.”

In the video below, Bloomberg Intelligence’s Athanasios Psarofagis examines the flight to quality from bonds to stocks in the ETF market. He speaks on “Bloomberg Markets.”

For more market trends, visit ETF Trends.

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