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 stocks seemed an almost unanimous favorite heading into the year, with firms from State Street Global Advisors to USAA Asset Management and Charles Schwab Investment Management endorsing the strategy,” according to Bloomberg. “With slower economic growth and increased market volatility expected, investors want large companies with healthy balance sheets and cash flow that can better weather any storm.”
The $8.42 billion QUAL holds 125 stocks, none of which exceed weights of 4.34%. The technology, healthcare and financial services sectors combine for almost half the fund’s weight.
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