In this episode of Two Quants and a Financial Planner, we dive deep into the world of quality and low volatility factors in investing. We explore how these factors work, their academic foundations, and their practical applications in portfolio construction.

We discuss the definitions of quality and low volatility, examining how they're measured and why they can be valuable additions to investment strategies. We also look at the behavioral aspects that make these factors effective, particularly in helping investors stick to their long-term plans.

Using real-world examples, we analyze several ETFs that employ quality and low volatility strategies, demonstrating how to use tools like Validea to understand what's really going on under the hood of these funds. We examine sector exposures, factor tilts, and how these ETFs might fit into broader portfolio strategies.

0:00 Introduction
1:14 Defining quality and low volatility factors
5:32 Etymology and concept of quality in investing
9:45 Academic definitions of quality
13:22 Joseph Piotroski's F-score
18:30 Low volatility factor explanation
22:15 Why quality and low volatility work
26:40 Behavioral explanations for factor effectiveness
31:05 Quality and low volatility as complementary factors
35:18 Analyzing quality ETFs using Validea
41:30 Examining QVAL: a value ETF with quality exposure
45:55 SPLV: Low volatility ETF analysis
51:35 USMV: Minimum volatility ETF breakdown
55:18 Using quality and low volatility in portfolio construction
58:06 Behavioral benefits of quality and low volatility factors
59:19 Closing thoughts and sign-off

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