Events | June 30, 2023

The Quality Spectrum

Stability in an Unstable World


In this webcast, Tom Hancock, Head of Focused Equity, discusses the genesis of GMO’s latest Quarterly Letter, The Quality Spectrum: Stability in an Unstable World. We extol the virtues of Quality, warn of some implementation pitfalls, and discuss why GMO’s long/short Quality Spectrum Strategy may prove particularly valuable in the environment that lies ahead.

Key Points:

  • In a survey sent out prior to the webcast, GMO’s results found that over 50% of allocators are looking to increase their exposure to Quality in 2023, and 40% feel nervous about the equity exposure in their portfolio today.
  • Valuation is important. A great business is not always a great stock. Historical data shows that Value within Quality can enhance return and improve downside protection.
  • Don’t forget about Growth. High ROI Growth is worth a big premium and our current exposure of around 45% to Quality Growth has been our strongest performer this year.
  • We believe GMO’s Focused Equity team is uniquely suited to run a fundamental/quant hybrid portfolio focused on Quality. We are excited about our Quality Spectrum Strategy, a net long Quality/short Junk portfolio. From November 2019 inception through the end of April 2023, the beta has been closer to 0.7 in a market that jumped almost 50%. Yet, when the market dropped almost 20% in 2022 as measured by the MSCI ACWI, Quality Spectrum fell less than 2% net of fees.

Contact Us to Watch the Replay*

*This content is intended for accredited investors only
Performance data quoted represents past performance and is not predictive of future performance. Please click here for more recent performance.
Risks associated with investing in the Strategy may include Equities Risk, Short Investment Exposure Risks, Focused Investment Risk, Currency Risks, and Smaller Company Risks