Flight To Quality

Dictionary Says

Definition of 'Flight To Quality'

The action of investors moving their capital away from riskier investments to the safest possible investment vehicles. This flight is usually caused by uncertainty in the financial or international markets. However, at other times, this move may be an instance of investors cutting back on the more volatile investments for the conservative ones (i.e. diversifying) without much consideration of the international markets.
Investopedia Says

Investopedia explains 'Flight To Quality'

For example, during a bear market investors will often move their money out of equities and into government securities and money market funds. Another example is investors moving investments from high-risk countries with political unrest and volatile economic conditions to less risky markets of other countries. One indication of a flight to quality is a dramatic fall of the yield on government securities, which is a result of the increased demand for them.

Sign Up For Term of the Day!

Try Our Stock Simulator!

Test your trading skills!

Related Definitions

  1. Capitulation

    When investors ...
  2. Government Security

    A bond (or debt ...
  3. Money Market Fund

    An investment ...
  4. Yield

    The income ...
  5. Partial Redemption

    An ...
  6. Dash To Trash

    When investors ...
  7. Six Sigma

    A ...
  8. Employee Engagement

    A business ...
  9. Acceptable Quality Level - AQL

    A statistical ...
  10. Hong Kong Stock Exchange (HKG) .HK

    One of the ...

Articles Of Interest

  1. Investing Basics: Flight To Quality

    At times of market stress, investors flee from risky assets to investments the safest ones available.
  2. Why does a crisis in emerging markets cause U.S. Treasury yields to decrease?

  3. Cyclical Versus Non-Cyclical Stocks

    Investing during an economic downturn simply means changing your focus. Discover the benefits of defensive stocks.
  4. Connecting Crashes, Corrections And Capitulation

    Even though crashes, corrections and capitulations are bad news for investors holding the stock, there are still ways to profit.
  5. Has Your Fund Manager Been Through A Bear Market?

    How to find a portfolio that will survive when the bulls stop charging.
  6. The Money Market

    If your investments in the stock market are keeping you from sleeping at night, it's time to learn about the safer alternatives in the money market.
  7. 3 Ways You Can Evaluate Country Risk

    Diversifying your portfolio includes looking beyond your borders. Here are a few ways to analyze risk when investing abroad.
  8. Getting Started In Foreign Exchange Futures

    Learn how these futures are used for hedging and speculating, and how they are different from traditional futures.
  9. Find Equity Opportunities With Currency Moves

    Understanding the relationship between these markets can help you spot profitable stocks.
  10. Go International With Foreign Index Funds

    As global trade continues to expand and the world's economies grow, spice up your portfolio with these exciting opportunities.

comments powered by Disqus
Recommended
Loading, please wait...
Trading Center