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Investment Returns to Quality in Developed Markets

10 Pages Posted: 7 Nov 2014  

Baijnath Ramraika, CFA

Multi-Act EquiGlobe Limited

Prashant Trivedi

MAEG

Date Written: October 30, 2014

Abstract

Quality, defined as companies with high returns on capital, good quality of earnings, and low leverage, has substantial superior investment return predictability. Quality firms as selected by our strategy generate substantially superior returns even though they are significantly larger than the average company in terms of market capitalization. Further, returns from quality are higher than the benchmark even though risk as measured by standard deviations as well maximum drawdowns is lower than the market.

Keywords: Quality, Equities, Stocks, Finance, Returns on Capital, Quality of Earnings, Free Cash Flow, Leverage, Debt, Drawdown, Low Risk

JEL Classification: G10, G11, G12, G14, C22

Suggested Citation

Ramraika, CFA, Baijnath and Trivedi, Prashant, Investment Returns to Quality in Developed Markets (October 30, 2014). Available at SSRN: https://ssrn.com/abstract=2520037 or http://dx.doi.org/10.2139/ssrn.2520037

Baijnath Ramraika, CFA (Contact Author)

Multi-Act EquiGlobe Limited ( email )

1102, The Core
No. 62, ICT Avenue, Cybercity
Ebene, Mauritius 72201
Mauritius
2304681188 (Phone)

HOME PAGE: http://www.symantaka.com/

Prashant Trivedi

MAEG ( email )

3rd Flr, Trade Centre Bldg
North Main Road, Koregaon Park
Pune, Maharashtra 411001
India

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