Quality Investing: A Smarter Approach for Volatile Markets

When we have a choice, we prefer to use high quality products as they offer us extra utility like better features, safety etc. We often buy high quality smartphones, cars, safety equipment etc. for these reasons. Using such products can give us peace of mind, as we know they are likely to be reliable during difficult conditions. Similarly, is there an investing style which can give us relative peace of mind during difficult market conditions?

Yes, there is! Quality investing focuses on selecting resilient and stable businesses with strong balance sheets, which could help navigate periods of market stress with relative confidence. This style of investing aims to choose those companies from the broader market which are:

• Efficient, as they use their equity capital in an effective way to generate profits
• Stable, as such companies have less exposure to the business cycle so they are able to grow steadily even in difficult economic conditions
• Resilient, as businesses with strong balance sheets can weather economic downturns better since they don’t have debt burden to service

The Nifty100 Quality 30 Index chooses 30 high quality largecap companies from the parent index i.e. Nifty 100 Index with the above characteristics.

For more information, refer product literature /Index Methodology

Why consider Quality Investing?

As Quality investing focuses on financially strong and resilient companies, it has the potential to unlock the benefits of compounding long-term returns, while providing relative peace of mind during market volatility. The Nifty100 Quality 30 TRI has delivered 13.5% CAGR compared to 12.2% CAGR for the Nifty 100 TRI, highlighting its potential for long-term wealth creation (returns considered from index inception on Oct 1, 2009 to Jan 31, 2025).

Quality strategy has most of the times outperformed the Nifty 100 Index over the long-term

Source: NSE Indices Ltd. and internal calculations. As on Jan 31, 2025. ^Oct 01, 2009 is the inception date for the Nifty100 Quality 30 TRI. Past performance may or may not be sustained in the future and is not a guarantee of any future returns. HDFC AMC/Mutual Fund is not guaranteeing or promising or forecasting any returns. *CAGR: Compounded Annual Growth Rate

How can an investor get exposure to the Quality factor?

Investors can get exposure to the Quality factor by considering to invest in the HDFC Nifty100 Quality 30 Index Fund (NFO between Jan 31-Feb 14), or the HDFC Nifty100 Quality 30 ETF.

The scheme could be suitable for investors seeking long-term wealth creation through a quality-first investment approach focused on resilient and stable businesses with strong balance sheets.

NIFTY Disclaimer: HDFC NIFTY100 Quality 30 ETF "(the Product)" offered by HDFC Asset Management Company Limited are not sponsored, endorsed, sold or promoted by NSE INDICES LIMITED (formerly known as India Index Services & Products Limited (IISL)). NSE INDICES LIMITED does not make any representation or warranty, express or implied (including warranties of merchantability or fitness for particular purpose or use) and disclaims all liability to the owners of the Products or any member of the public regarding the advisability of investing in securities generally or in the Products linked to NIFTY100 Quality 30 Index or particularly in the ability of the NIFTY100 Quality 30 Index to track general stock market performance in India. Please read the full Disclaimers in relation to the NIFTY100 Quality 30 Index in the Offer Document of the Products.

It is to be distinctly understood that the permission given by National Stock Exchange of India Limited (NSE)/ BSE Limited (BSE) should not in any way be deemed or construed that the Scheme Information Document (SID) has been cleared or approved by NSE/ BSE nor does it certify the correctness or completeness of any of the contents of the SID. The investors are advised to refer to the SID for the full text of the Disclaimer clause of NSE/ BSE.

NIFTY Disclaimer: HDFC Nifty100 Quality 30 Index Fund "(the Product)" offered by HDFC Asset Management Company Limited is not sponsored, endorsed, sold or promoted by NSE INDICES LIMITED (formerly known as India Index Services & Products Limited (IISL)). NSE INDICES LIMITED does not make any representation or warranty, express or implied (including warranties of merchantability or fitness for particular purpose or use) and disclaims all liability to the owners of the Products or any member of the public regarding the advisability of investing in securities generally or in the Product linked to Nifty100 Quality 30 Index (TRI) or particularly in the ability of the Nifty100 Quality 30 Index (TRI) to track general stock market performance in India. Please read the full Disclaimers in relation to Nifty100 Quality 30 Index (TRI) in the SID of the Product.

HDFC Asset Management Company Limited has been managing equity Index Solutions for over 20 years.

MUTUAL FUND INVESTMENTS ARE SUBJECT TO MARKET RISKS, READ ALL SCHEME RELATED DOCUMENTS CAREFULLY.