No. of Recommendations: 2
"I came across this in P123 post. It's a ranking system for determining Quality companies."
This screen may be similiar to iShares MSCI USA Quality Factor ETF QUAL.
Note the fundamental variables: high return on equity, low earnings variability and low leverage.
Plus Sector Neutral Quality weighted.
Principal Investment Strategies
The Fund seeks to track the investment results of the MSCI USA Sector Neutral Quality Index(the 'Underlying Index'), which is based on a traditional market capitalization-weighted parent index, the MSCI USA Index (the 'Parent Index'). The Parent Index includes U.S. large- and mid-capitalization stocks, as defined by MSCI Inc. (the 'Index Provider' or 'MSCI'). The Underlying Index seeks to measure the performance of securities in the Parent Index that exhibit higher quality characteristics relative to their peers within the corresponding Global Industry Classification Standard (GICSŪ) sector. To construct the Underlying Index, the Index Provider determines the quality score of each security in the Parent Index based on three fundamental variables: high return on equity, low earnings variability and low leverage. The Underlying Index is weighted based on a component's quality score multiplied by its weight in the Parent Index. Weights in the Underlying Index are next normalized so that sectors in the Underlying Index represent the same weight as in the Parent Index. Additionally, each individual issuer is capped at 5%.
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