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 June 12, 2024
CSV download
Apple, Inc. (AAPL)52.03%$3.27T-4.31%46.58%7.05
Mastercard, Inc. (MA)6.52%$414.23B10.38%96.60%17.82
The Home Depot, Inc. (HD)5.43%$332.90B-2.25%32.25%2.50
QUALCOMM, Inc. (QCOM)3.83%$232.71B1.23%56.27%5.32
Applied Materials, Inc. (AMAT)3.14%$190.41B0.32%47.39%6.37
Texas Instruments Incorporated (TXN)2.85%$179.77B-16.40%57.22%9.73
Lam Research Corp. (LRCX)2.18%$130.71B-1.96%47.86%8.92
Lowe's Companies, Inc. (LOW)2.05%$124.42B-4.40%31.18%1.98
The TJX Cos., Inc. (TJX)1.95%$121.03B5.91%29.92%2.12
KLA Corp. (KLAC)1.79%$111.46B-3.12%59.11%10.17
Automatic Data Processing, Inc. (ADP)1.61%$100.92B6.62%51.44%5.45
Starbucks Corp. (SBUX)1.45%$90.49B-1.84%19.69%3.45
Chipotle Mexican Grill, Inc. (CMG)1.37%$85.98B14.07%24.38%8.14
Altria Group, Inc. (MO)1.32%$79.70B-0.97%69.54%4.80
McKesson Corp. (MCK)1.20%$76.70B11.65%3.95%0.24
O'Reilly Automotive, Inc. (ORLY)0.94%$58.90B7.24%51.16%4.64
Moderna, Inc. (MRNA)0.89%$56.61B-91.07%20.96%6.49
AutoZone, Inc. (AZO)0.77%$48.02B3.54%53.49%3.58
Fortinet, Inc. (FTNT)0.74%$45.64B7.21%77.48%9.38
Paychex, Inc. (PAYX)0.71%$44.21B4.22%73.61%8.34
IDEXX Laboratories, Inc. (IDXX)0.68%$41.81B7.10%61.60%12.35
Otis Worldwide Corp. (OTIS)0.63%$39.40B2.72%29.94%3.29
Yum! Brands, Inc. (YUM)0.61%$38.59B-2.86%50.06%7.22
Old Dominion Freight Line, Inc. (ODFL)0.61%$37.79B1.24%33.27%8.07
HP, Inc. (HPQ)0.57%$35.52B-2.00%23.04%0.68
Fair Isaac Corp. (FICO)0.54%$32.50B14.08%79.89%20.80
Mettler-Toledo International, Inc. (MTD)0.48%$30.78B-0.30%57.23%8.11
NVR, Inc. (NVR)0.38%$23.48B9.20%24.68%2.69
Ulta Beauty, Inc. (ULTA)0.31%$18.62B3.48%39.25%1.82
Best Buy Co., Inc. (BBY)0.29%$18.79B-6.55%23.26%0.43
Domino's Pizza, Inc. (DPZ)0.29%$18.42B5.88%38.89%4.59
Synchrony Financial (SYF)0.29%$17.05B51.53%82.65%0.77
VeriSign, Inc. (VRSN)0.29%$18.13B5.46%87.22%13.21
Expeditors International of Washington, Inc. (EXPD)0.28%$17.57B-14.89%15.64%1.88
Masco Corp. (MAS)0.24%$15.19B-2.68%35.57%2.61
CF Industries Holdings, Inc. (CF)0.23%$13.74B-26.94%28.10%3.23
Bath & Body Works, Inc. (BBWI)0.16%$9.76B-0.86%43.79%2.02
APA Corp. (APA)0.14%$11.02B-2.84%38.34%2.02
Robert Half, Inc. (RHI)0.11%$6.68B-14.01%37.23%1.30
Zions Bancorporation, NA (ZION)0.10%$6.01B11.63%N/A2.47
Market data by FactSet