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Quality investing – How to outperform growth and value long term

12th October, 2021

Executive summary

 
  • 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.

 

Introduction

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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