Quick Read – SPHQ screens the S&P 500 for return on equity, earnings quality, and low leverage, returning 14% year to date versus the broad index’s 8%. – Pairing 60% SPY or VOO with a SPHQ sleeve sized between 15% and 20% delivers broad-market beta plus a quality tilt that…
storically limits drawdowns. – When SPY dropped 2.5% in a single week, SPHQ fell less than 1%, illustrating the downside cushion quality stocks provide in late-cycle volatility. – The quality factor tends to earn its keep when investors start worrying about balance sheets again, and the Invesco S&P 500 Quality ETF (NYSEARCA:SPHQ) is making that case in real time. SPHQ owns roughly 100 names from the S&P 500 that score highest on return on equity, accruals quality, and financial leverage
So far this year, SPHQ is up 15% year to date while the SPDR S&P 500 ETF Trust (NYSEARCA:SPY) is up 9.2%, and the gap has been widening as the broader market wobbles. What you actually own The S&P 500 Quality Index screens its parent universe on three measures. Return on equity captures how efficiently a company turns shareholder capital into profit.
The accruals ratio flags companies whose reported earnings drift from actual cash flow, catching aggressive bookkeeping. Financial leverage penalizes balance sheets dependent on cheap credit. The roughly 100 highest scorers get weighted by quality score times market cap.