Page 15 - Best of the Best | The Only Prescription for Healthy Finances

In Figure 4 we look at every period between June 1976 and ongoing period is labeled as Late stage by our methodology
September 2022 where the U.S. economy was in a unique stage and has negative returns as of September 2022). The opposite
and cycle as defined by our methodology, then observe annualized is true for the Early stages, where Quality underperformed for
average excess monthly returns of MSCI USA Quality over MSCI each observed cycle. Mid stage performance is a mixed bag,
USA. For four of five Recessions and all five completed Late stages underperforming in two periods but overperforming in the other
in our observation period, performance is positive (the current four observed periods.

Quality Outperformance for Each Observed Business Cycle

Early Mid

15.0% 15.0%

10.0% 10.0%
5.0% 5.0%

0.0% 0.0%

-5.0% -5.0%
-10.0% -10.0%
1979 06 - 1977 01 1982 12 - 1983 09 1991 04 - 1994 01 2001 12 - 2003 07 2009 07 - 2013 06 2020 05 - 2021 05 1977 02 - 1979 01 1983 10 - 1988 12 1994 02 - 1998 05 2003 08 - 2006 05 2013 07 - 2018 08 2021 06 - 2022 01

Late Recession

15.0% 15.0%

10.0% 10.0%

5.0% 5.0%
0.0% 0.0%

-5.0% -5.0%

-10.0% -10.0%
1979 02 - 1979 12 1989 01 - 1990 06 1998 06 - 2001 06 2006 06 - 2007 11 2018 09 - 2020 01 2022 02 - 2022 09 1980 01 - 1982 11 1990 07 - 1991 03 2001 03 - 2001 11 2007 12 - 2009 06 2020 02 - 2020 04

Figure 4: Source: Polen Capital, FRED, NBER, FactSet. Data latest available as of September 30, 2022.

4 Polen Capital
Quality’s Performance Across the Business Cycle