High-Quality
Time For Dividend Stocks, But Stick With Quality
With multiple indicators flashing signs of an economic slowdown amid trade war uncertainty, investors are betting that an interest rate cut is on the horizon.
Incongruities In High Quality
Quality is one of the most popular and successful of the equity market’s quant factors. It is intuitively appealing and serves as a useful defensive strategy in falling markets. Low Volatility and Dividend Growth are also defensive factors, while Momentum and High Beta are viewed as aggressive or bullish factors. These offsetting behaviors would seem to make for excellent diversification opportunities in equity portfolios, and for the most part, that is true.
Incongruities In High Quality
Quality is one of the most popular and successful of the smart beta factors. It is intuitively appealing and serves as a useful defensive strategy in market drawdowns.
Leverage Factor: A Boost For High Quality Stocks?
A review of Quality factors, as well as the lower valuations of High Quality stocks, supports the current High Quality cycle amid rising market volatility. The Leverage factor may provide particularly strong backing for High Quality stocks.
Leverage Factor: A Tailwind For High Quality Stocks?
Following 2016 underperformance, High Quality stocks eked out an advantage over Low Quality stocks to begin 2017 (+5.3% versus +2.1%, respectively). Yet, the “Junk Rally” trend seems difficult to reverse.
High Quality Stocks Slightly Underperform YTD
Even though Low Quality spends the majority of time outperforming, investors benefit exponentially from holding High Quality during the bad times.
High Quality Stocks Shine Again During Market Tumult
On a relative basis, High Quality Stocks lived up to the reputation of providing a safe haven.