When the market gets rough, you hear a lot about a "flight to quality."
In the stock market, that means companies that have a lower risk profile thanks to traits such as dependable earnings, strong balance sheets, plump dividends or lower-than-average trading volatility, for example.
"Given the likely slowing industrywide for earnings growth in 2022, we think investors will benefit from a diversified basket of higher-quality companies," says Todd Rosenbluth, head of ETF and mutual fund research at CFRA.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Fidelity Quality Factor ETF (FQAL) tracks a proprietary index designed to home in on stocks with a higher-quality profile than the broad market.
The index measures how efficient a company is at converting sales to cash, how much profit it generates with the assets invested by stock and bond holders, and how consistently it can generate positive free cash flow (cash profits left after investing to maintain and expand the business). The approach differs from that of funds that overweight a particular sector, say, or focus mostly on debt levels.
The exchange-traded fund has a higher expense ratio than many of its peers, but its returns are competitive.
With just under $260 million in assets – compared with billions for similar offerings iShares MSCI USA Quality Factor ETF (QUAL) and Invesco S&P 500 Quality ETF (SPHQ), for example – the Fidelity fund "is an under-the-radar quality ETF," says Rosenbluth, with a "higher reward potential and less risk than its high-quality peers and the broader U.S. market."
-
4 Black Friday Scams to Watch Out forThe deals are heating up, but so are the scams. Here's how to spot some of the most common Black Friday scams this holiday season.
-
Ramit Sethi Tells Us the Biggest Retirement Mistake You Can MakeThe MasterClass instructor, author and behavioral finance expert on what could be costing retirees their happiness.
-
Dow Soars 493 Points in Fed-Fueled Bounce: Stock Market TodayNew York Fed President John Williams struck a dovish tone Friday, which eased Wall Street's worries over a potential December pause.
-
Dow Erases 717-Point Gain to End Lower: Stock Market TodayThe main indexes started the day with solid gains, but worries of an AI bubble weighed on stocks into the close.
-
S&P 500 Snaps Losing Streak Ahead of Nvidia Earnings: Stock Market TodayThe Dow Jones Industrial Average also closed higher for the first time in five days, while the Nasdaq Composite notched a win too.
-
Dow Trims Its Loss to 498 Points: Stock Market TodayMarkets are wondering more and more about returns on the enormous amounts of capital hyperscalers are investing in AI.
-
Dow Falls 557 Points to Start NVDA Week: Stock Market TodayThe Oracle of Omaha saw growth and value in certain corners of the stock market during the third quarter.
-
Investors Buy the Nasdaq's Big Dip: Stock Market TodayStocks are up and down again to end an up-and-down week ahead of big earnings announcements and the eventual return of regular economic data flow.
-
Dow Dives 797 Points as Government Opens: Stock Market TodayThe process of pricing and re-pricing realities old and new never stops, and next week promises to be at least as exciting as this week.
-
Dow Climbs 327 Points, Crosses 48,000: Stock Market TodayMarkets are pricing the end of the longest government shutdown in history – and another solid set of quarterly earnings.
