Quality investing, as a strategy, focuses on selecting companies that exhibit robust and enduring characteristics, with an aim to achieve stable and consistent returns over the long term. Various data points and analyses have shed light on the performance of quality investing across different time frames and market conditions:

1. Recent Performance: On August 31, 2022 and January 31, 2023, companies categorised as high-quality outperformed the S&P 500 by 3.7 percentage points, hinting at the possibility of quality stocks entering a new cycle of outperformance. (Nelson, J. (2023)).

2. Long-term Outperformance: A study spanning 18 years from 2002 to 2020 and regions including North America, Europe and the pacific region including Japan, found that quality factor outperformed its benchmark by 2.8% per annum, with an information ratio of 0.81, showcasing a consistent long-term outperformance of quality investing (Lepetit, F., Cherief, A. & Ly, Y. and Sekine, T. (2021)).

3. Performance in times of stress: Data from 2001 to 2020 indicated that quality and growth stocks tend to fare better following a recession. For instance, during the Global Financial Crisis (2007-2009), investors in these stocks, on average, were more likely to recoup their losses faster compared to the broader market. (Motley Fool Wealth Management (2023)).

4. Performance during Market Turbulence: A recent analysis indicated that quality investing demonstrated resilience amidst market turbulence over the past decade, which included a bear-market episode, rising inflation, and fluctuating rates. (Conway, C (2023)).

5. Unusual Performance in 2022: The first half of 2022 witnessed an unusual performance of quality investing. Typically, during market sell-offs driven by geopolitical issues or inflation concerns, investors find refuge in high-quality companies. However, in 2022, high-quality companies didn’t provide the expected cover. This underperformance was especially noticeable during April and May 2022, where global markets saw negative sector-relative performance in the highest quintile of quality, compared to the universe average.

The underperformance of quality in 2022 was less about high-quality being out of favor but more about the strong performance of value stocks, as value and quality tend to be negatively correlated. (Zani, C (2022)).

These data points and analyses showcase the enduring performance of the quality factor across different market scenarios and time frames.