The Oppenheimer Russell 1000 Quality Factor ETF (OQAL) bets on higher quality companies in the hopes that they perform better than lower-quality companies. The fund screens for an equally-weighted composite of return on assets, change in asset turnover, accruals, and leverage.
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While the quality factor often trades at a premium to value, quality stocks are usually less volatile than traditional broad market strategies.
“Quality has a lot more overlap with defensive stocks. Health care is the best-performing sector in the S&P 500 this year, up more than 12 percent and is among the groups most heavily weighted in quality companies,” according to CNBC.
OQAL allocates a combined 43% of its weight to technology and healthcare stocks compared with 33% in the Russell 1000 Index.
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