© Bloomberg. Goldman Sachs Group Inc. signage is displayed on a monitor on the floor of the New York Stock Exchange (NYSE) in New York, U.S., on Monday, May 1, 2017. U.S. stocks resumed pursuit of a record, while haven demand ebbed as optimism from earnings reports and a deal by Congress to avert a government shutdown offset fresh signs the world’s largest economy had a sluggish start to the year.

(Bloomberg) — Owning “quality” stocks and bonds may seem expensive, but the trade still has further to go, according to Goldman Sachs Group Inc (NYSE:).

The preference for quality has been apparent for a while now in everything from U.S. shares and high-yield debt to emerging-market equities and credit, Goldman strategists Lotfi Karoui and Caesar Maasry wrote in a note Wednesday. Despite expensive valuations, it is not yet time to rotate back into lower-quality assets, they said.

“We see plenty of reasons why the ‘bid for quality’ will remain strong,” the strategists wrote. “For U.S. equity and credit markets, these include pressures on margin growth, and the lack of fundamental upside for over-leveraged and often secularly challenged firms.”

In emerging markets, a more positive view on low-quality stocks would require improved economic data, but so far in 2019 it has been mixed, they said.

Goldman has company from the likes of Pacific Investment Management Co. and Societe Generale (PA:) SA in recommending quality shares in the current market environment. The calls come as the composition of what classifies as quality evolves — Invesco Ltd. recently noted that almost 30% of its quality-based exchange-traded fund is comprised of technology companies.

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“Whether the bid for low-quality assets eventually returns will depend to a large extent on investors’ willingness to re-embrace a mid-cycle view,” the strategists wrote. “We think the bar is high.”

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