Equity Strategies Group-Level Analysis Of The Equity Markets
“Reliable” Health Care And The Presidential Election
Health Care has been resilient this year, but will that continue in the run-up to the presidential election? We look at the performance of the Attractively-ranked industry groups and how they have historically performed leading up to an election and post-election.
Sector Rankings
There was some movement among the sector rankings. While Health Care, Information Technology, and Communication Services remained the top-three rated sectors (out of eleven total), Consumer Staples advanced to the 4th spot from 6th and Financials dropped to the 8th position from 5th. The bottom-three rated sectors, Real Estate, Energy, and Utilities are the same as last month.
Housing Groups Heat Up
A major driver of the division in recent performance among retail groups has been the burgeoning “nesting” theme. Stuck at home, consumers are directing their dollars toward indoor and outdoor home upgrades. A related theme has now established itself in the upper rankings of our group work—Housing.
Sector Rankings With Attractive/High Neutral And Unattractive Industry Groups
There was no movement among the sector rankings. Health Care, Communication Services, and Information Technology are the top-three rated sectors (out of eleven total). The bottom-three rated sectors are Real Estate, Energy, and Utilities.
Retail’s Winners And Losers Of The Pandemic
Following the market bottom, the rebound across retail industries has been robust, but a divide has emerged. Consumers’ needs and behaviors have dramatically shifted as former lifestyles were uprooted. This swift change in economics has resulted in clearly-defined sets of winners and losers among retail industries.
Sector Rankings With Attractive/High Neutral And Unattractive Industry Groups
There was minimal movement among the sector rankings. The only two to shift positions were Industrials and Materials, with the former dropping to 8th from 7th place and the latter rising to 7th place from 8th. Health Care, Communication Services, and Information Technology are the top-three rated sectors (out of eleven total). The bottom-three rated sectors are Real Estate, Energy, and Utilities.
S&P 500 Sector Leaders Since Market Top
Since the market peak on February 19th the S&P 500 Health Care sector is down only 1.1%. Among the S&P 500 sector indexes, Health Care and Consumer Discretionary are the performance leaders.
Pockets Of Strength Among Discretionary Industries
A brief overview of two (very different) Attractively-rated Discretionary groups that are longstanding SI portfolio holdings that have managed to maintain their “Attractiveness” throughout the tumult.
Sector Rankings
For the third consecutive month, Health Care, Communication Services, and Information Technology remain the top-three rated sectors (out of eleven total). Materials moved up to 7th place from 9th, while Utilities declined from 8th place to last, with Real Estate and Energy the next lowest rated.
Robust Health Care Leads Since Market Peak
Health Care has been the best performing sector following mid-February’s market peak. Its robust relative performance during this bear market isn’t terribly surprising given the sector’s defensive qualities, but it has impressively outpaced other safe haven areas.
Sector Rankings
For the second consecutive month, Health Care, Communication Services, and Information Technology remain the top-three rated sectors. Consumer Discretionary and Financials swapped spots and are ranked 4th and 5th, respectively. Real Estate joined Materials and Energy to rank at the bottom.
Popular Low/Minimum Volatility Strategies Disappoint
During the peak-to-trough market drawdown through mid-March, some of the most popular Low/Min Vol ETFs did not perform as anticipated. Stable and boring businesses, that weather downturns relatively well, are facing atypical vulnerabilities.
Sector Rankings
For the third consecutive month, Health Care and Information Technology remain among the top three rated sectors. Financials dropped from second to fourth and Communication Services took its spot as #2 (up from 5th). Consumer Staples has improved to 6th from the 8th position. Utilities, Materials, and Energy continue to rank at the bottom.
Group Ideas For Tumultuous Times
The economic outlook has turned increasingly cautionary, investors are on edge, and the search for yield persists. Because the typical defensive/high-yielding plays are generally both expensive and unappealing in our group work, we highlight several less conventional groups that may be poised to outperform.
Sector Rankings
For the second consecutive month, the top-three rated sectors are Health Care, Financials, and Information Technology. Real Estate has improved to 6th from the 8th lowest and is now more attractive than Industrials and Consumer Staples sectors. Utilities and Energy have ranked among the three-lowest rated positions for twelve consecutive months; they are joined by Materials—which has ranked among the bottom-four spots for twelve months running.
Stocks And The U.S. Presidential Election Cycle
Our equity research typically focuses at the sector and industry group levels, thus, in this analysis, we drill down and explore the presidential effect on a more granular level to see what interesting equity trends may have transpired in the past cycles.
Sector Rankings
The top-three rated sectors are Financials, Health Care, and Information Technology, the same as last month. Real Estate moved out of the bottom three rankings after a one-month stay and Materials edged back in following its one-month respite. Utilities and Energy round out the bottom, which have placed among the lowest rated now for eleven consecutive months.
Sector Rankings
The top-two rated sectors are Financials and Information Technology. Health Care advanced to rank #3, while Communication Services—among the top-three positions since July—was bumped down to #5. Real Estate, which ranked highly in the top three just six months ago, deteriorated to the 9th lowest (out of eleven broad sectors). Materials edged out of the bottom three ranks after nine consecutive months, while Utilities and Energy have now been among the bottom three positions for ten months in a row.
Industry Returns: The Decade’s Winners & Losers
This “decade in review” edition examines the performance of sectors and industries, looking at the best and worst groups to reveal the stories they have to tell.
Seeing Construction Materials’ True Colors
Construction Materials moved to an Attractive rating, fueled by growth and price momentum. Surprisingly, digging into the numbers revealed it to have lower beta dynamics. Based on this, we examined the cyclical nature of the group to better understand the impact it may have on overall portfolio cyclicality.