Quality 40 Index



Index Performance




This index is based on the assumption that 1) the SP500, although a great index, is filled with low quality companies and that 2) company quality can be evaluated mainly on the return it gets on its invested capital (ROIC) as said by notable investors (Munger, Smith, etc.). Following these assumptions, this index was made by taking the the 40 (number to be revised) top businesses in the SP500 based on their ROIC and weighting them according to their market cap to reduce the need for rebalancing. Although the index beats the SP500, it does have a few problems which will need to be addressed. For one since the index is market cap weighted, Apple holds a very large part of the pie. This exposure could be reduced with more diversification. However, doing so might reduce returns since the more business are added, the lesser the quality of the index.

  • TickerQYIX
  • Inception Date08/18/2023
  • WeightingMarket Cap
  • # of holdings40
What's inside?


All holdings as of September 29, 2023
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Apple, Inc. (AAPL)51.98%$2,676.737B-1.40%44.52%8.09x
Mastercard, Inc. (MA)7.14%$370.116B14.21%96.94%16.18x
The Home Depot, Inc. (HD)5.99%$302.180B-2.00%31.47%2.45x
Texas Instruments Incorporated (TXN)2.85%$144.376B-13.07%64.22%8.85x
Lowe's Cos., Inc. (LOW)2.43%$119.948B-9.17%31.94%1.79x
QUALCOMM, Inc. (QCOM)2.43%$123.943B-22.72%55.13%3.48x
Applied Materials, Inc. (AMAT)2.34%$115.818B-1.09%46.28%4.82x
Starbucks Corp. (SBUX)2.04%$104.541B12.51%23.16%3.85x
The TJX Cos., Inc. (TJX)1.99%$101.686B7.73%30.04%2.12x
Automatic Data Processing, Inc. (ADP)1.94%$99.112B8.48%48.88%5.14x
Lam Research Corp. (LRCX)1.69%$82.873B-30.54%45.78%4.69x
Altria Group, Inc. (MO)1.46%$74.622B1.19%69.09%5.17x
KLA Corp. (KLAC)1.28%$62.526B-5.07%60.24%6.65x
McKesson Corp. (MCK)1.13%$58.662B10.91%3.77%0.22x
O'Reilly Automotive, Inc. (ORLY)1.07%$54.766B10.85%51.28%4.32x
Chipotle Mexican Grill, Inc. (CMG)0.99%$50.536B13.62%24.34%6.67x
Fortinet, Inc. (FTNT)0.92%$46.084B25.50%76.77%11.60x
AutoZone, Inc. (AZO)0.91%$46.116B6.40%52.71%3.21x
Old Dominion Freight Line, Inc. (ODFL)0.86%$44.706B-15.25%34.05%6.85x
Paychex, Inc. (PAYX)0.83%$41.661B7.45%69.93%7.44x
Moderna, Inc. (MRNA)0.75%$39.311B-92.71%-138.66%3.70x
IDEXX Laboratories, Inc. (IDXX)0.72%$36.299B9.65%60.72%12.29x
Yum! Brands, Inc. (YUM)0.70%$35.010B3.12%50.50%7.34x
Otis Worldwide Corp. (OTIS)0.64%$33.067B6.65%29.11%3.12x
HP, Inc. (HPQ)0.50%$25.399B-7.56%21.17%0.78x
Mettler-Toledo International, Inc. (MTD)0.46%$24.228B0.38%57.58%7.85x
Fair Isaac Corp. (FICO)0.42%$21.589B14.25%81.91%15.15x
VeriSign, Inc. (VRSN)0.40%$20.888B5.71%86.48%16.65x
NVR, Inc. (NVR)0.38%$19.466B-13.42%24.67%2.07x
Ulta Beauty, Inc. (ULTA)0.38%$19.664B10.13%39.28%2.21x
Expeditors International of Washington, Inc. (EXPD)0.33%$16.953B-51.34%16.81%1.36x
CF Industries Holdings, Inc. (CF)0.33%$16.543B-47.62%45.30%1.87x
Best Buy Co., Inc. (BBY)0.30%$15.119B-7.22%22.95%0.46x
Domino's Pizza, Inc. (DPZ)0.26%$13.293B-3.81%39.49%3.68x
APA Corp. (APA)0.25%$12.629B-41.06%43.82%1.86x
Synchrony Financial (SYF)0.25%$12.784B33.39%80.55%1.10x
Masco Corp. (MAS)0.24%$12.022B-9.57%36.15%1.95x
Robert Half, Inc. (RHI)0.15%$7.847B-11.99%39.46%1.08x
Bath & Body Works, Inc. (BBWI)0.15%$7.685B-3.65%39.90%1.81x
Zions Bancorporation, NA (ZION)0.10%$5.169B51.30%N/A2.42x
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