Quality investing to tide over uncertain global economy and markets

AFTER A spectacular run in the previous couple of years, the equity markets hit the skids from September 2024, which extended for a six-month period as FPIs hit the exit button.

- PURUSHOTHAMAN S.S.

But market volatility and a weak corporate as well as economic cycle may continue.

Reciprocal tariffs announced by the US is set to result in lower growth not just for that country, but for many other economies around the world.

Time for quality

In the post-COVID period, aided by fiscal and monetary stimulus, the broader markets did well as did several factor investing styles. Quality as a theme has been a relative underperformer over FY21-FY25. This has made valuations reasonable for quality companies and make them reasonable propositions now.

It is however important to understand how to make the most of the quality theme. The investing process starts with defining quality and using the right filters.

What qualifies as quality