Methodology

The Meridian Quality Index is a rules-based, systematic equity index. It screens U.S.-listed companies for durable business quality and holds a concentrated set of the strongest names, rebalanced on a regular schedule.

Index Objective

The Index seeks durable U.S. businesses that compound value over time — companies that earn strong returns on the capital they employ, grow on their own merits, and consistently return cash to shareholders. Each candidate is evaluated against a consistent set of factors, and the highest-quality names are admitted.

What the Index Looks For

Companies are assessed across several dimensions of business quality and resilience. Among the factors considered:

• Returns on capital — how efficiently a business turns invested capital into profit, favoring companies that sustain high returns.
• Durable, organic growth — growth driven by the underlying business rather than one-off acquisitions or financial engineering.
• Balance-sheet strength — modest leverage and the financial flexibility to weather downturns.
• Cash generation & shareholder returns — steady free cash flow and a consistent record of returning cash through dividends and buybacks.
• Valuation discipline — a preference for quality available at a reasonable price rather than at any price.
• Risk & stability — lower fundamental and price-based risk, with an eye to structural threats to the business.

These factors are combined into a single quality assessment used to rank candidates. The emphasis is on businesses that score well across the board rather than excelling on one dimension alone.

Construction

The Index holds a concentrated portfolio of the highest-ranked eligible companies. Holdings are weighted to reflect both company size and quality, with a ceiling on any single position so that no one name dominates the Index. Partnerships and other ineligible structures are excluded.

Rebalancing

The Index is reviewed and rebalanced on a regular calendar schedule. A retention preference for existing holdings limits unnecessary turnover from small changes in rank, while a periodic full refresh keeps the roster aligned with the current screen. Between rebalances, the Index monitors holdings for material deterioration and can reduce or remove a position when warranted.

Data & Governance

The Index draws on public company filings, market data, and analytical workflows to assess each company. The methodology is versioned, and material changes are recorded with an effective date. Inputs are subject to error, revision, and delay.

This page provides a high-level overview of the Index methodology and is not a complete specification.