QuestorThis graph tells you why we strongly prefer ‘quality’ stocks

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Questor: this graph tells you why we have such a strong preference for ‘quality’ stocks

Graph of stock performance

Questor share tip: companies that meet certain ‘quality’ criteria have hugely outperformed – and smaller ones have done best of all

We are not tipping a stock today: we are tipping an investment style.

The graph shows why.

It covers four different types of stock, and the huge difference in performance between the best and worst is immediately obvious.

The best category, with annual outperformance over effectively risk-free assets of 8.5 percentage points, is small, “high-quality” stocks. The worst, which has returned less than risk-free assets, is small, “low-quality” stocks.

Good returns, with annual outperformance of 6.2 percentage points, have come from large, high-quality stocks, while…

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