QUAL Shows There's Nowhere To Hide In Equity Markets

Summary

  • QUAL is supposed to focus on "high quality" companies by creating an index on the basis of a quality factor, including high ROE and limited accounting gimmickry.
  • The holdings look alright, but the ETF has actually declined more than the broader market which indicates that money isn't flowing to quality in equity markets.
  • Shows that there was nowhere to hide in equity markets, which we felt as well in the recent corrections and will feel again in the vice between unemployment and rate-hiking.
  • Nothing wrong with QUAL, but the concepts that build the portfolio aren't particularly value-add. Would rather go for a REIT ETF or something with more yield.
  • Looking for a helping hand in the market? Members of The Value Lab get exclusive ideas and guidance to navigate any climate. Learn More »

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The iShares MSCI USA Quality Factor ETF (BATS:QUAL) is a relatively lightweight ETF for your portfolio that attempts to capture stocks that associated with factors that might define quality. Things like ROE, little accounting gimmickry and low leverage

While we don't often do macroeconomic opinions, we do occasionally on our marketplace service here on Seeking Alpha, The Value Lab. We focus on long-only value ideas, where we try to find international mispriced equities and target a portfolio yield of about 4%. We've done really well for ourselves over the last 5 years, but it took getting our hands dirty in international markets. If you are a value-investor, serious about protecting your wealth, us at the Value Lab might be of inspiration. Give our no-strings-attached free trial a try to see if it's for you.

This article was written by

The Valkyrie Trading Society is a team of analysts sharing high conviction and obscure developed market ideas that are downside limited and likely to generate non-correlated and outsized returns in the context of the current economic environment and forces. They are long-only investors.

They lead the investing group The Value Lab where they offer members a portfolio with real time updates, chat to answer questions 24/7, regular global market news reports, feedback on member stock ideas, new trades monthly, quarterly earnings write-ups, and daily macro opinions.

Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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