The Enduring Case for

Investing in Quality Companies


Key Takeaways

  • The potential for rising inflation and market volatility are top of mind for many investors. 
  • We think investment strategies that incorporate high-quality companies may be appropriate for those seeking to manage long-term risk.
  • Over time high-quality stocks have outperformed with less risk.

 

We believe the stocks of high-quality companies have the potential to enhance portfolio resilience and performance throughout the market’s ups and downs.

 

What Is a Quality Stock?

While there’s no universally accepted definition of quality, we consider various characteristics when evaluating the quality of companies, including:

Strong management teams
Leading market positions and strong brands
Business models that provide steady streams of income
High standards for environmental, social and corporate governance issues
Low levels of debt that could help weather market downturns or acquire other businesses


The Enduring Case for Investing in Quality Companies

Investment return and principal value of security investments will fluctuate. The value at the time of redemption may be more or less than the original cost. Past performance is no guarantee of future results.

A strategy or emphasis on environmental, social and governance factors ("ESG") may limit the investment opportunities available to a portfolio. Therefore, the portfolio may underperform or perform differently than other portfolios that do not have an ESG investment focus. A portfolio's ESG investment focus may also result in the portfolio investing in securities or industry sectors that perform differently or maintain a different risk profile than the market generally or compared to underlying holdings that are not screened for ESG standards.

This material has been prepared for educational purposes only. It is not intended to provide, and should not be relied upon for, investment, accounting, legal or tax advice.

The opinions expressed are those of American Century Investments (or the portfolio manager) and are no guarantee of the future performance of any American Century Investments' portfolio. This material has been prepared for educational purposes only. It is not intended to provide, and should not be relied upon for, investment, accounting, legal or tax advice.