Outperforming the MSCI World Index: Strategies Focused on Superior Quality over Quantity
Over the past 15 years, the MSCI World Index has been the benchmark, but the MSCI World Quality Index, with its focus on financially strong, stable, and well-managed companies, has outperformed it - boasting a smaller portfolio with 1,114 fewer stocks.
The reason is simple: Quality companies exhibit more stability, resilience, and provide higher long-term returns. When picking stocks, it's not just about growth but also the durability and sustainability of the companies. A sterling example of a high-quality company is Atlas Copco. The Swedish equipment manufacturer excels in innovation and stability. Starting in railway technology before moving onto mining, the company expanded its market dominance with air compressors and industrial tools. Strategic acquisitions, like in the vacuum pump industry for the chip industry, have helped Atlas Copco break into growth sectors.
Investors adore the company's strong market position: As a "giant in a niche," Atlas Copco leads the compressor market with around 50% market share in pumps. The high capital return and efficient capital deployment are admired by fund managers like Christian Kahler. Approximately 60% of the operating profit comes from the lucrative spare parts and service business - double the industry average. Over the past decade, the stock has achieved an impressive annual total performance of 19%. Atlas Copco shows how quality companies don't just thrive in stable markets but also deliver above-average returns.
A Bavarian company can also impress with quality: For 145 years, reinsurer Munich Re has been taking on risks from primary insurers and climbed to the top of the industry through exceptional risk analysis and strong management continuity. Founder Carl von Thieme already highlighted that a reinsurer must be internationally positioned - a principle that has made Munich Re a global market leader.
The secret to Munich Re's success lies in its remarkable expertise in risk and damage assessment, combined with remarkably stable corporate governance. CEO Joachim Wenning, the ninth in the company's history, also brought primary insurer Ergo back into the black. Besides successful reinsurance, asset management is a crucial success factor for Munich Re. This strong and diverse structure makes Munich Re a steadfast company with above-average long-term returns. Over the past decade, the stock has achieved an impressive annual total performance of over 16%.
Want to know about other companies, besides Atlas Copco and Munich Re, that prioritize quality over quantity and contribute to your portfolio's long-term success? Read the new issue of €uro - The Magazine for Economy and Money. In the cover story for the New Year, which promises to bring breaks and changes of course, €uro demonstrates how to ensure financial success.
For regular benefits from the €uro editorial team's well-reasoned evaluations on investment, tax, and insurance topics, we recommend the €uro trial subscription at a special price: 3 digital issues for only 15.99 euros instead of 23.97 euros. Take action now and get the €uro magazine at an unbeatable price.
Special Offer
FLAGGING! Beyond Apple, Toyota, Hermès, Johnson & Johnson, and Procter & Gamble, the following companies are well-known for emphasizing quality, innovation, and long-term success:
- Greenpeace: A global environmental organization prioritizing quality sustainability practices and long-term environmental protections, delivering impactful outcomes over time.
- Amazon Web Services (AWS): Known for its high-quality cloud computing services, AWS provides consistent reliability and functionality, leading to sustained customer loyalty and financial success.
- L'Oréal: A cosmetics company with a strong focus on quality products and customer experiences, demonstrating long-term growth and investor confidence with its impressive product portfolio.
- Centene Corporation: A U.S. healthcare services company that prioritizes quality care for underserved communities, generating steady growth through its mission-driven operations.
- Visa: A global payment services company that emphasizes quality security and reliability in transactions, promoting customer trust and long-term financial success.
These companies exemplify the importance of promoting quality, innovation, and sustainable long-term performance to build customer loyalty, strengthen brand reputation, and secure long-term financial returns.
- Investors seeking long-term success might consider Greenpeace, with its focus on sustainable quality practices and environmental protection.
- In the realm of payment services, Visa is recognized for its emphasis on quality security and reliability, helping to promote customer trust and long-term financial success.
