Seeking Quality in the S&P 500
This fund favors highly profitable firms with durable competitive advantages.
PowerShares S&P 500 Quality ETF (SPHQ) did not always have a quality mandate. Prior to June 30, 2010, it tracked the Value Line Timeliness Select Index, which did not behave anything like a quality strategy. But because of poor performance, PowerShares moved the exchange-traded fund over to the S&P 500 High Quality Rankings Index on that date.
That move wasn't great from a stewardship perspective (it would have been better for the firm to shutter the original fund), and it rendered much of the fund's performance irrelevant. It switched benchmarks again in March 2016 to the S&P 500 Quality Index, which applies a more transparent quantitative methodology.
Alex Bryan has a position in the following securities mentioned above: USMV. Find out about Morningstar’s editorial policies.