The quality investment factor can help investors focus on companies that are better equipped to handle uncertainties the markets may throw at us, sifting out corporations with questionable profit outlooks and rising debt levels as a way to hone in on those with solid fundamentals.
In the upcoming webcast, Focus on Quality to Navigate Changing Markets, Samantha Azzarello, Executive Director, Global Market Strategist, J.P. Morgan Asset Management; and Josh Rogers, Investment Specialist, Beta Strategies, J.P. Morgan Asset Management, will highlight the benefits of the quality factor and discuss how a quality investment strategy can enhance and diversify investment portfolios.
For example, the J.P. Morgan U.S. Quality Factor ETF (NYSEArca: JQUA) can help investors shift to quality or companies with healthy balance sheets and strong cash flows.
The J.P. Morgan U.S. Quality Factor ETF is designed to reflect the performance of the J.P. Morgan U.S. Quality Index, which is comprised of U.S. securities included in the Russell 1000 Index and selects constituents based on their quality as measured by profitability, solvency, and earnings quality. The profitability component screens for strong earnings and cash flow. Financial risk singles out those with low leverage, high interest coverage, or low share price volatility. Lastly, earnings quality includes companies with consistent accounting practices.
As a better way to manage risk and limit losses during volatile periods, quality has been one of the few equity styles to post positive excess returns during periods when stocks sold off sharply in the first quarter. Additionally, the quality factor can still help capture growth potential as markets recover. Quality stocks have historically outperformed the broad market across cycles with less risk, producing more attractive risk-adjusted returns over time.
Financial advisors who are interested in learning more about the quality market factor can register for the Wednesday, September 30 webcast here.