A brief overview on the Strong Quality approach

Presented by

Konrad Sippel, Dr. Elton Babameto, Brendan Maton

About this talk

The world of investment strategies is a very crowded one. Depending on investors’ risk profiles, investment horizons and preferences, a wide array of methodical approaches is employed in the constant chase for superior investment returns. In their pursuit of market-beating returns, successful investors have traditionally looked for companies which - very broadly speaking - enjoy the following characteristics: •An established track record of superior profitability •Strong balance sheets •Attractive valuations The STOXX Strong Quality indices offers investors a straightforward and intuitive way to obtain exposure to high-quality companies that have been historically profitable, enjoy strong working capital positions and come with compelling valuations. Companies must pass a set of strict numerical thresholds in order to establish desired company profitability and liquidity levels, and to build an investment margin of safety: •Liquidity screens (ADTV) •Return on capital (ROC) screens •Current ratio (CR) screens In addition, the inclusion of a valuation metric as a screening tool aims to provide index access to attractively priced companies, only: •EBITDA/EV evaluations against US AAA Bond Yield

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