ETF Insights

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Quality

“I like investing in companies with solid balance sheets.”

Quality strategies

In “quality” strategies investors seek out companies with durable business models which should remain profitable regardless of the business cycle. These are often the so-called boring companies, like utilities, which tend to have modest variability in earnings. High quality stocks selected by such accounting criteria as profit margin, earnings growth, return on equity or debt-to-equity tend to outperform low quality stocks over the long term. Like low volatility stocks, they are particularly in demand in times of market turbulence.