So far, 2016 hasn’t been an easy time for quality-oriented investors. If you look at returns across the ASX, low-quality companies, like many in the Materials and Energy sectors, have provided stellar returns, while high-quality companies have delivered comparatively boring returns. Despite this, we don’t believe it’s time to abandon quality businesses. At MIM, we have generally been pleased with our stock selection efforts, and satisfied with the way the profits of our portfolio companies have been growing, but in share price terms our portfolios have not been keeping pace with the broader market. One of the factors that have been driving relative performance during this period has been an interesting dynamic around quality. In particular, the market appears to have been eschewing quality in favour of… something else.