While the quality factor often trades at a premium to value, quality stocks are usually less volatile than traditional broad market strategies, indicating some overlap with the low volatility factor.
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.
“Typically, investors would be required to pay a significant premium to own more stable, quality companies. Uniquely for both the WisdomTree Indexes, higher quality metrics are offered at a significant discount to the Russell 2000,” said WisdomTree.
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