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.
“Quality investments can offer a protective middle ground between the typical Value and Growth dynamic. Quality companies generally exhibit more profitability, less leverage and stable earnings relative to their peers, making them more resilient when earnings may have peaked or an economic cycle is maturing,” according to BlackRock.
Quality has traits and utility that are durable in various market climates.
“Both over the full business cycle and during economic periods of slowdown and contraction, we believe Quality captures an important source of diversified and rewarded return,” said BlackRock.
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