(Harvest) Growth stocks’ extended dominance over value has captured the headlines of late. That said, since the end of 2016 it has really been about momentum. While investors have focused on earnings growth, an even better approach would have been to simply buy the stocks rising the fastest, otherwise known as momentum investing. Year-to-date, momentum continues to outperform the rest of the market, but the regime may be shifting towards a different equity style. As I discussed last February, when uncertainty and volatility are rising, quality tends to outperform . As trade issues have escalated, this has once again proved the case. Since the early summer, companies in the MSCI Quality Index have outperformed other investment styles as well as the broader market (see Chart 1).
Quality as a Hedge Against Rising Volatility
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