Gateway market perspective

Market volatility experts from Gateway Investment Advisers, specialists in options-based investment strategies, examine key volatility trends and risk management ideas each month to help investors stay invested for the long run.

Identifying quality:

• Investing in quality stocks may offer a powerful combination of defensive resilience and long-term growth potential for portfolios. 
• Quality companies are often better equipped to navigate economic uncertainty and market volatility compared to their lower-quality peers due to strong balance sheets, high profitability and abundant cash-flow generation. 
• By seeking high profitability characteristics and avoiding those associated with excessive leverage, investors can potentially reap the benefits of financially durable businesses that stand out as quality leaders within their respective industries.
• Gateway has developed a distinct investment process that aims to increase a portfolio’s overall quality score. With the broad S&P 500^® Index as the investment universe, this process results in a highly diversified portfolio of companies with established track records of profitability and strong fundamentals. 

Key takeaways: 

• Investing in quality stocks requires searching for high-quality attributes across the broad equity market. This process helps ensure diversification and avoids the omission of impactful index allocations. 
• Gateway’s quality optimization process uses a disciplined, quantitative approach to maximize profitability metrics while minimizing leverage. 
• For Gateway, the result is an equity portfolio that maintains comprehensive market exposure with a decisive tilt toward companies with the potential for more durability and financial soundness.