Are minimum volatility and quality the same or different?

These two factor-based, low-risk equity strategies have gained popularity over the past decade, particularly in response to poor market performance during the global financial crisis. While they each stem from different starting points — minimum volatility from a statistical risk perspective and quality being focused on fundamental company earnings — their performance profiles can be remarkably similar. But can investors assume these are interchangeable strategies for differing objectives? In this brief paper, “Are minimum volatility and quality the same or different?” the Macquarie Systematic Equity Team compares and contrasts the two strategies.

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IMPORTANT RISK CONSIDERATIONS

Investing involves risk, including the possible loss of principal.

The views expressed represent the Manager's assessment of the market environment as of April 2019, and should not be considered a recommendation to buy, hold, or sell any security, and should not be relied on as research or investment advice. Views are subject to change without notice and may not reflect the Manager's views.

Past performance does not guarantee future results.

Diversification may not protect against market risk.

Market risk is the risk that all or a majority of the securities in a certain market — like the stock market or bond market — will decline in value because of factors such as adverse political or economic conditions, future expectations, investor confidence, or heavy institutional selling.

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