Invesco S&P 500 Quality ETF Poised to Outperform in Next Bear Market

The Invesco S&P 500 Quality ETF (SPHQ) has garnered attention for its performance during bear markets, according to Morningstar. This fund focuses on high-quality stocks within the S&P 500 Index, giving it a more defensive posture and making it less volatile during market downturns.

Morningstar notes that the fund's holdings are screened for companies with the highest quality score based on return on equity, accruals ratio, and financial leverage ratio. The ETF holds 99 stocks from the S&P 500 Index, with a concentration among its top 10 holdings at 43.4%. This group features Mastercard, Visa, GE Vernova, Costco, and GE Aerospace.

During the 2022 rate-hike bear market, the fund outperformed the S&P 500, declining 17.3% compared to the broader market index's 19.4% slump. The author predicts that this ETF will deliver even wider outperformance relative to the S&P 500 in an AI-driven bear market.