According to Bank of America, one area of the market is set to benefit from increased market volatility: quality stocks, or stocks with strong business models and financial fundamentals.
And the cherry on top is that quality stocks — which typically become expensive during downturns — are still cheap despite their recent rally, coming out of a two-decade rut.
As seen in the graph below, the high-quality factor serves as a hedge against elevated market volatility.
Bank of AmericaQuality is still cheapLuckily for investors, this safe-haven area of the stock market is trading at an attractive valuation.
Bank of AmericaWhile quality stocks have recently re-rated to a slight premium, they're still reasonably priced, according to Bank of America.
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