Quality Factor ETFs Outperform Peers in 2023, Thanks to Tech Stocks

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Quality factor exchange-traded funds (ETFs) have emerged as strong performers in 2023, outpacing value, low-volatility, momentum, and size factors. The iShares MSCI USA Quality Factor ETF (QUAL), the largest quality factor ETF with $34 billion in assets, has delivered a year-to-date return of 25%, driven by the performance of major tech stocks. Factor investing assesses specific traits exhibited by companies, and quality focuses on firms with high profit margins, low debt, and consistent earnings.

ETF Newz Says:

According to Robert Hum, U.S. head of Factor ETFs at BlackRock, the Magnificent Seven’s dominance in 2023 underscores the importance of holding these tech-related names in a portfolio. While quality factor ETFs have thrived this year, factor investing is typically considered a long-term strategy, with historical data supporting its effectiveness over extended periods.

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