I try to read widely, as I think it’s essential for investors. Some fund managers produce excellent content and I am therefore sharing some thoughts from my review of two studies looking at quality stocks. The first is Amundi Asset Management’s Revisiting Quality Investing, a 100-page paper from last year. The second is a study by Invesco which its chief investment officer (CIO) recently discussed at a conference.
The Amundi paper set out the best way to define quality as a factor. Stocks were grouped into quintiles according to various quality criteria and their performance following the global financial crisis analysed, from 2007-20. There was a striking difference between the lowest and highest quality stocks:
