Quality investing – How to outperform growth and value long term
12th October, 2021
- Quality has outperformed growth and value over the long term but is less commonly used as a basis for investment.
- High-quality stocks are more resilient and capture less of the downside in down markets.
- Our proprietary measure of quality has outperformed the MSCI World Quality Index over the long term.
Many investors favour the concepts of growth and value in their investment strategies. The concepts are well defined, researched and familiar. The concept of quality is increasingly used as a basis for investment and there are many views as to how quality can be defined. Our analysis of quality suggests that certain companies - irrespective of their value or growth orientation - exhibit numerous common factors, such as high returns and margins, appropriate leverage, and consistent dividends and payout ratios.
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Warning: Past performance is not a reliable guide to future performance. Investments may go down as well as up. Some figures are forecasts, which are only estimates. They should not be relied upon to make investment decisions. The value of investments may fall as well as rise.
The information discussed in this article does not purport to be comprehensive or all inclusive. It does not constitute an offer for the purchase or sale of any financial instrument, trading strategy, product or service. No one receiving this document should treat any of its contents as constituting advice or a personal recommendation. It does not take into account the investment objectives or financial situation of any particular person.
This communication is directed at professional advisers only and should not be distributed to or relied upon by retail customers.