S&P 500 High Quality Index

Today I learned that S&P tracks a “High Quality” segment of the S&P 500. Wow, you really do learn something new every day. There’s also a “Low Quality” segment.

Since I’m a big proponent of investing in high-quality stocks, I wanted to check out this index. There are currently 135 stocks in the S&P 500 High Quality Index.

This is how S&P describes it:

The S&P Quality Rankings System measures growth and stability of earnings and recorded dividends within a single rank. Scores have been calculated on common stocks since 1956. S&P 500® High Quality Rankings are designed for exposure to constituents of the S&P 500 identified as high quality stocks – stocks with Quality Rankings of A and above.

There’s an ETF that tracks the index under the symbol SPHQ.

Here’s a chart of the High Qual index (blue line, right scale) along with the S&P 500 (red line, left scale).


I scaled the two axes to have the same proportions. Just by looking at this, it appears that High Qual isn’t as volatile. Sure enough, I calculated the beta and came up with 0.946.

Now here’s the High Quality index divided by the S&P 500. This is somewhat similar to the relative performance of our Buy List.


High Qual got crushed during the last 10 months of 2007. Since the cycle low on July 14, 2008, High Qual has done very well beating the S&P 500, 107.98% to 72.66%.

I also looked at the total return numbers. High Quality usually has a higher return from dividends, but the effect isn’t that great.

Posted by on May 28th, 2015 at 9:25 pm

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.