Quality is one investment factor that has been spending considerable time in the spotlight in recent weeks, a trend that is benefiting exchange traded funds such as the iShares Edge MSCI USA Quality Factor ETF (Cboe: QUAL).
QUAL seeks to track the investment results of the MSCI USA Sector Neutral Quality Index composed of U.S. large- and mid-capitalization stocks exhibiting quality characteristics as identified through racks U.S. large- and mid-capitalization stocks based on quality screens for three fundamental variables: return on equity, earnings variability and debt-to-equity.
Data suggest investors have recently been flocking to QUAL.
“More than $1.3 billion flowed into the iShares Edge MSCI USA Quality Factor ETF, or QUAL, on Tuesday, data compiled by Bloomberg show. That was a record for the fund, which focuses on companies supposed to fare better in downturns, and double the amount added to any other U.S.-listed ETF,” reports Bloomberg.
Calling On ‘QUAL’ ETF
The quality factor is a point of emphasis for a growing number of strategic beta exchange traded funds. Though there has been debate surrounding defining quality as it pertains to factor-based investing, quality companies and dividend-paying stocks often go hand-in-hand because those dividends are seen as signs of stable earnings and thoughtful management.