Global Equity
July 31st 2026
- We rank more than 350 Global equity funds using our proprietary Quality framework to identify the highest-quality portfolios, which we classify as Quality Leaders.
- Quality investing is driven more by stock selection than large country or sector bets, with broad ownership of Microsoft, Alphabet, TSMC and NVIDIA across Quality Leader portfolios.
- Quality comes at a price. Despite owning many of the world’s strongest businesses, Quality Leaders have been the weakest-performing group over the past five years.
Defining Quality
Quality investing is synonymous with owning the world’s best businesses. In practice, that often conjures up images of US large-cap technology, but does that really capture what a Quality portfolio looks like?
To answer that question, we score every company in our Global universe using three characteristics: earnings persistence, return on equity and debt-to-equity. We then roll those scores up to the portfolio level, allowing us to identify the managers investing most heavily in high-quality businesses.
More than 350 Global equity funds are then grouped into four categories, ranging from Quality Diversified to Quality Leaders. The remainder of this report focuses on those top quartile funds with the highest portfolio quality scores.
Quality Leaders
The Quality Leaders category contains the highest-quality portfolios in our Global equity universe. While all rank in the top quartile based on our portfolio quality framework, there remains meaningful variation in both their overall quality score and the proportion of assets invested in high-quality companies.
At the extreme end of the spectrum sit funds such as Ninety One Global Quality Dividend Growth and Nutshell Growth, combining exceptionally high portfolio quality with the greatest concentration in high-quality businesses.
Regional Positioning
The regional footprint of Quality Leaders has been remarkably consistent over time. EMEA has remained the largest overweight for more than a decade, while Asia and the Americas have persistently been held below benchmark weights.
The size of these active positions has fluctuated as markets have evolved, but the underlying regional preferences have changed very little. Recent activity does show a tightening of the Asia underweight as Quality managers extend their Americas underweight.
Country Allocations
Looking beneath the regional headlines reinforces the picture. The US remains the largest country exposure by a considerable margin, accounting for almost 60% of the average Quality Leader portfolio. However, relative to benchmark, managers continue to favour the UK, France, the Netherlands and Taiwan.
Japan and Canada represent the largest developed market underweights, suggesting Quality investors are highly selective in where they find businesses capable of delivering consistent long-term returns.
Sector Allocations
At sector level, the picture is much closer to investors’ expectations. Information Technology is the largest overweight, complemented by modest above-benchmark allocations to Industrials, Health Care and Communication Services.
These positions are funded primarily through underweights in Financials, Energy and Utilities, sectors where fewer companies meet the quality characteristics defined by our framework.
Yet despite these active positions, the overall sector and country profile remains relatively close to the MSCI ACWI. Quality investing is perhaps defined less by large top-down sector and country bets and more by the stock selection within them.
The Most Widely Owned Stocks
The stock-level data leaves little doubt about where Quality investors find the world’s best businesses.
Microsoft, Alphabet, TSMC and NVIDIA are owned by more than 80% of Quality Leaders, while Amazon, ASML, Broadcom and Visa also feature among the widely held. Tencent stands out as the only Chinese company with truly broad ownership, appearing in more than 40% of portfolios.
Which Companies are Quality Leaders Avoiding?
Every investment style has opportunity costs. Quality Leader portfolios have relatively little interest in companies where earnings are more cyclical, balance sheets are more leveraged, or valuations depend heavily on future expectations.
Tesla is perhaps the most striking omission, owned by fewer than one in five Quality Leaders despite its prominence within global indices. Energy companies such as Exxon Mobil are similarly scarce, while Berkshire Hathaway and many of the world’s largest banks also receive little attention.
The Price of Quality
The highest-quality portfolios trade on materially higher earnings and book value multiples than the broader Global equity universe. Investors are paying a premium for businesses with stronger balance sheets, more durable earnings and consistently higher returns on capital.
Whether that premium proves worthwhile will always depend on market conditions. However, history suggests that Quality investors are less concerned with buying the cheapest companies than owning businesses capable of compounding value over many years.
Has Quality Delivered?
Despite holding many of the world’s highest-quality businesses, Quality Leaders have been the weakest performing group over the past five years, returning 34.9% compared with 51.6% for Quality Diversified portfolios.
This serves as an important reminder that quality and performance are not the same thing. While Quality Leaders have consistently favoured businesses with stronger balance sheets, higher returns on equity and more persistent earnings, investors have also paid a meaningful valuation premium for those characteristics. Over the past five years, that premium has proved difficult to overcome. But markets move in cycles, so will the next five years belong to Quality Leaders?
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