Investing in quality stocks will always remain an evergreen strategy to create wealth in the markets. However, when persistent inflation continues to plague the economy, with no rate cuts in sight, the allure of quality stocks increases - and even more so, given the various geopolitical flashpoints that are keeping investors across the globe on edge.
So, we know that taking shelter in quality stocks with strong fundamentals and the ability to navigate through challenging business cycles is a sound strategy. But what makes a quality stock? And what about those of us who aren't expert stock pickers?
For investors who don't have the expertise, confidence, or just the bandwidth to identify and actively manage quality stocks in this market, there's an exchange-traded fund (ETF) for that. Here are three ETFs that feature “quality stocks” as their theme, for investors seeking a one-stop solution. However, be sure to carefully consider each fund's size, liquidity, and fees before seeking shelter.
1. iShares MSCI USA Quality Factor ETF (QUAL)
Founded in 2013, the iShares MSCI USA Quality Factor ETF (QUAL) has BlackRock (BLK), the world's largest asset manager, as its issuer. It seeks to track the investment results of an index composed of U.S. large- and mid-capitalization stocks with quality characteristics. These characteristics are identified through certain fundamental metrics, such as profitability, financial health, and growth potential. Its assets under management (AUM) are currently at $41.7 billion.
Up 8.2% on a YTD basis, QUAL's average daily volume traded is at 1.3 million shares. Moreover, the ETF also offers a dividend yield of 1.16%.
Its three top holdings include Nvidia (NVDA), Visa (V), and Microsoft (MSFT).
2. Invesco S&P 500 Quality ETF (SPHQ)
The Invesco S&P 500 Quality ETF (SPHQ) is managed by one of the largest asset managers of the world, Invesco (IVZ). This ETF seeks to track the investment results of the S&P 500 Quality Index. This index focuses on companies within the S&P 500 that exhibit strong financial characteristics like profitability, low debt, and sustainable growth potential. Its AUM is currently at $8.68 billion.
SPHQ is up 9% on a YTD basis, and it offers a dividend yield of 1.33%. The average daily share volume for the ETF is just over 1 million.
The ETF's top three holdings are geared towards the tech sector, with Nvidia, Broadcom (AVGO), and Google parent Alphabet (GOOG) occupying the top 3 spots.
3. JPMorgan U.S. Quality Factor ETF (JQUA)
We conclude our list with the JPMorgan U.S. Quality Factor ETF (JQUA), an ETF that is managed by investment banking major JPMorgan (JPM). The ETF seeks to track the performance of the JPMorgan US Quality Factor Index. This index focuses on U.S. large- and mid-cap stocks exhibiting strong quality characteristics like profitability, low debt, and sustainable growth potential. Its AUM is currently at $4.02 billion.
JQUA is up 6% on a YTD basis, and offers a dividend yield of 1.19%. The average daily share volume for the ETF is just below 500,000.
The ETF's top three holdings are Meta, Nvidia, and Alphabet (GOOGL).
On the date of publication, Pathikrit Bose did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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