Articles & Insights
Investment Executive  |  31 May 2019

The quality puzzle

Why do markets reward investors for holding stocks that usually provide excess returns over low-quality ones?

Of all the factors associated with long-term outperformance by equities, quality is the most puzzling. Because investors demand a return premium for incurring risk, it is easy to understand why small company stocks have outperformed over long time frames: they are more volatile and less liquid than large-capitalization stocks. Read more >