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Quality’s performance across the business cycle

Quality’s performance across the business cycle

Quality stocks have been shown in studies to have robust historical performances.1 This analysis takes a deeper look into the Quality factor’s performance by breaking out its history into the four stages of the business cycle: Early, Mid, Late, and Recession.

Observing the performance of Quality for each of these unique periods yields evidence that Quality stocks tend to perform better in Late and Recession stages, while underperforming in Early stages. Quality’s performance in Mid stages is also generally solid; however, there are multiple periods in this stage where the Quality factor has underperformed, including the late ’70s and the mid 2000s.

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1Asness, C.S., Frazzini, A. & Pedersen, L.H. Quality minus junk. Rev Account Stud 24, 34–112 (2019). https://doi.org/10.1007/s11142-018-9470-2.


Established in 1979, Polen Capital is a high conviction growth investment manager with offices in the US and UK. Polen has been dedicated to serving investors by providing concentrated portfolios of the highest-quality companies for more than three decades. The firm’s established team manages US$71 billion in total assets and their longest-running flagship investment strategy has delivered on average double digit annual returns for more than 30 years.

This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.

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