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.
Low Quality Stocks Dominate
Investors brushed off a global economic slowdown and drove up the value of risky assets. Current low-quality leadership has been in place for eight months thus far.
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.
Quality Stock Rankings: Low Quality Momentum Persists
Low Quality Momentum persists, and a look at how Valuation factors affect the Quality model output.
Low Quality Continues To Outperform
Despite rising market volatility, Low Quality stocks ended Q2 up 3.8%, slightly better than High Quality’s 3.4% gain. YTD, High Quality stocks are up 14%, just behind Low Quality stocks at +16.6%.