Over the past three years, SPHQ has returned 9.28%, according to issuer data. The ETF currently holds 99 stocks with an average market capitalization of $126.33 billion.
“Market volatility has a way of making investors rethink defensive equity strategies. The S&P 500 Quality Index, with a high hit rate of 75% during down months, is a factor that has historically had a higher degree of downside protection compared with riskier factor strategies,” according to S&P Dow Jones.
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.
While the quality factor can have some overlap with value, over 44% of SPHQ’s large-cap holdings are classified as growth stocks.
For more information on the smart beta strategy, visit our smart beta category.