“Quality” stocks with strong fundamentals tend to be rewarding places to stash hard-earned money. Since 2009, investing in a basket of quality stocks over a standard index has been a strong divergence. Analysis from T. Rowe Price shows that the quality-focused MSCI All-Country World Index (ACWI) significantly outperformed the standard ACWI.
However, just because a stock has a quality company behind it doesn’t mean it will be a great investment. Reactions to new information can damper a company’s value, especially in the short term. However, this can also create an opportunity to invest in a quality company at a good price.
