• Despite a prolonged period of value leadership in international equities, quality stocks have historically delivered more consistent long-term outperformance, benefiting from durable earnings, strong balance sheets, and the ability to compound returns across full market cycles.
• Valuation spreads¹ between the most and least expensive stocks have narrowed to unusually low levels, suggesting diminished upside for value strategies and signaling a more attractive entry point for quality-oriented investments.
• Historically, periods of extremely low valuation dispersion—like today—have often preceded strong relative performance for quality stocks, with data showing meaningful outperformance vs. value over subsequent one- and three-year periods across sectors and asset classes.
• With rising macro uncertainty, potential earnings pressure, and elevated correction risk, investors may increasingly favor high-quality companies offering resilient earnings, defensiveness, and stable cash flows—positioning quality for a potential leadership rebound.

VIEW PDF

¹ In finance, the term spread refers to the difference between two related financial metrics: often a stock price or the differential between bond yields.

Important Risks: Investing involves risk, including the possible loss of principal. • Foreign investments may be more volatile and less liquid than U.S. investments and are subject to the risk of currency fluctuations and adverse political, economic and regulatory developments. • Different investment styles may go in and out of favor, which may cause a fund to underperform the broader stock market. 

The views expressed herein are those of Schroders Investment Management, are for informational purposes only, and are subject to change based on prevailing market, economic, and other conditions. The views expressed may not reflect the opinions of Hartford Funds or any other sub-adviser to our funds. They should not be construed as research or investment advice nor should they be considered an offer or solicitation to buy or sell any security. This information is current at the time of writing and may not be reproduced or distributed in whole or in part, for any purpose, without the express written consent of Schroders Investment Management or Hartford Funds.