Why You Should Buy Quality ETFs on Sale Now

U.S. stock futures have been wavering lately as major indexes struggled to recover from last week’s sell-off. Investors remained cautious following new tariff-related comments from President Donald Trump. President Trump reiterated his commitment to imposing 25% tariffs on Mexico and Canada, stating that they are "on time, on schedule" for March 4.

Inside the Tariff Tantrum

Investors should note that tariffs on China went into effect in early February, prompting retaliation.A 25% tariff on steel and aluminum imports was recently implemented. Reciprocal tariffs on U.S. trading partners could take effect as soon as April. Automobile imports may also face new levies around the same time.

The escalating trade tensions are expected to stoke inflation, pushing prices higher. This, in turn, may hold the Federal Reserve back from cutting interest rates faster in the coming days. President Trump also hinted at discussions with Russian President Vladimir Putin regarding "major economic development transactions" between the two nations.Meanwhile, the United States issued fresh sanctions on Iranian oil.

Brent crude surged above $75 per barrel following a slight gain on Monday, while West Texas Intermediate hovered around $71. The United States imposed additional restrictions on brokers, ships, and individuals it claims are involved in illicit shipments of Iranian crude. Although the new measures are limited, they follow a series of other sanctions.

Economic Data Raises Alarm

Several economic indicators have fueled investor anxiety lately. The University of Michigan consumer sentiment index fell to 64.7 in February — a nearly 10% decline — as consumers voiced inflation concerns, particularly due to possible new tariffs. The five-year inflation outlook climbed to 3.5%, the highest since 1995.

U.S. existing home sales dropped more than expected in January. The U.S. services purchasing managers’ index (PMI) dipped into contraction territory for February, per S&P Global data.

“Magnificent Seven” Falls From Grace on DeepSeek Buzz

As the dominance of the Magnificent Seven tech companies has diminished lately due to the rise of China’s DeepSeek AI, ProShares Global Investment Strategist Simeon Hyman joined Market Domination hosts Julie Hyman and Josh Lipton to discuss the evolving investment backdrop, as quoted on Yahoo Finance (read: Will the Rise of DeepSeek Usher in a New AI Era? ETFs in Focus).

Despite no longer leading the market, Hyman emphasized that major tech companies still have strength. Their performance remains stable, even as market dynamics shift. While acknowledging that stock prices have lagged behind fundamentals, Hyman put stress on the selectivity. "You don’t just want to shop in the bargain bin; you want to shop for quality on sale," he explained.

How to Manage Risk in an Evolving Market

For those looking to mitigate risk, Hyman advised against avoiding stocks altogether. Instead, he recommended maintaining a well-balanced portfolio to navigate market fluctuations effectively. One can try out quality ETFs specially those that are on sale.

Why It Is Time for High-Quality ETFs & Stocks

High-quality stocks are seen as relatively defensive and can provide safety to one’s portfolio during market downturns, like what we have been witnessing currently. Amid conflicting market signals, quality investing presents itself as a strategic approach to weathering market turbulence.Quality investing focuses on identifying companies with strong fundamentals, stable earnings and durable competitive advantages. 

5 Quality ETF Picks

Below, we highlight a few quality exchange-traded funds (ETFs) that are available on sale. These ETFs have a low P/E. These ETFs have beaten the S&P 500 so far this year (up 2.2% YTD) (as of Feb. 24, 2025). The S&P 500 ETF has a P/E of 26.90X.

American Century U.S. Quality Value ETF VALQ – P/E: 12.39X; Up 3.9% YTD

The underlying American Century U.S. Quality Value Index seeks to select securities of large and mid-capitalization companies that are undervalued or have a sustainable income. The fund charges 29 bps in fees and yields 1.53% annually.

SPDR MSCI EAFE StrategicFactors ETF QEFA – P/E: 12.69X; Up 7.9% YTD

The underlying MSCI EAFE Factor Mix A-Series Index captures large and mid-cap representation across 22 developed markets, Europe, Australasia, and Far East countries and aims to represent the performance of value, low volatility, and quality factor strategies. The ETF charges 30 bps in fees and yields 2.94% annually.

iShares MSCI International Quality Factor ETF IQLT – P/E: 14.16X; Up 8.3% YTD

The underlying MSCI World ex USA Sector Neutral Quality Index seeks to capture the performance of stocks deemed by MSCI Inc. by identifying common stocks with high-quality scores based on three main fundamental variables: high return on equity, stable year-over-year earnings growth & low financial leverage, while maintaining reasonably high trading liquidity, investment capacity & moderate index turnover. The ETF charges 30 bps in fees and yields 2.65% annually.

Invesco S&P 500 Quality ETF SPHQ – P/E: 15.3X; Up 4.7% YTD

The underlying S&P 500 Quality Index tracks the performance of stocks on the S&P 500 Index that have the highest quality score, which is calculated based on three fundamental measures, namely return on equity, accruals ratio and financial leverage ratio. The ETF charges 15 bps in fees and yields 1.10% annually.

Fidelity Quality Factor ETF FQAL – P/E: 16.83X; Up 3.5% YTD

The underlying Fidelity U.S. Quality Factor Index reflects the performance of stocks of large and mid-capitalization U.S. companies with a higher quality profile than the broader market. The ETF charges 16 bps in fees and yields 1.15% annually.

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