Articles by Greg Swenson Director of Equities
Info Tech, Financials, Health Care—Remain Top Three Rated Sectors
Among the bottom ranked sectors are Utilities, Materials, Energy, and Telecom Services. These four sectors have been the bottom four rated sectors for a minimum of eight months.
Paying Up For Protection
While most factors performed well during the January sell-off, those providing stability worked the best. Low Volatility, Profitability, and Size were notable outperformers.
GS Scores Perform Well In 2015
The Attractive-rated groups outperformed the Unattractive groups by 15.5% in 2015. This is the third positive year in a row, and the best performance differential since 2008.
Highlighted Attractive Groups
Groups within Info Tech and Health Care have been long time favorites; the Financials sector also looking more appealing of late. We are still anti-Commodity (for the third straight year).
Quantitative Factor Performance: What Is Working?
For the third consecutive year (thus far), quantitative factors worked best within the Materials sector. Energy also saw success as the decline in oil hurt the same stocks as in 2014. Factors were least effective in Health Care and Telecom.
Highlighted Attractive Groups
A snapshot of Automotive Parts & Equipment, Large Cap Biotechnology, and Reinsurance.
Health Care Comes Down With A (Minor) Cold
A reversal in momentum, driven by the oil and commodity stocks’ rebound, caused investors to take gains from Health Care positions. We’re still big fans of Health Care and think recent weakness is more of a correction within a sector bull market than the start of a full-fledged bear.
Momentum Hit Extreme Rough Patch
Despite one of its worst five-day performance stretches in early October, the Momentum factor bounced back nicely and performed well the rest of the month.
Highlighted Attractive Groups
Airlines has spent only three months below “Attractive” since early 2012 and the group’s factor category scores continue to provide solid results. We also like the growth prospects for Drug Retail and Apparel Retail.
A Good Year To Play The Bounce?
Our research shows that the best years to “Play The Bounce” are generally ones in which the stock market is heading down into the fourth quarter. We won’t rule out an allocation to the Bounce strategy in the weeks ahead.
GS Score Sector Rankings, and Highlighted Attractive Groups
Health Care, Consumer Discretionary, and Financials remain the top three rated broad sectors.
Short Interest Is A Valuable Tool
The Short Interest Ratio performs well as a factor; on both the long and short sides.
GS Score Sector Rankings, and Highlighted Attractive Groups
Advertising, Homefurnishing, Research & Consulting Services
Oil Impacting Factor Performance
Value and Profitability performed well during August. Market Cap was a surprise underperformer given the stock volatility.
Info Tech Sliding
IT’s overall sector rank has been falling recently. Growth has slowed, which has prompted downward earnings revisions, while valuation ratios have remained steady or gotten pricier.
GS Score Sector Rankings, and Highlighted Attractive Groups
Health Care, Consumer Discretionary, and Financials are the top three rated broad sectors.
Momentum Continues To Shine
Energy And Materials Driving Momentum Volatility
First Half Factor Performance: Sentiment And Momentum Drive Returns
Looking at year-to-date factor performance, Sentiment is the best performing; Momentum and Growth have also performed well.
Health Care & Consumer Sector Strength Explored
While we view the industry group selection as the most important decision, looking at the sector level rankings also helps us identify broad trends. Here we highlight the top two rated sectors, currently, which also represent a combined >40% weight in our Select Industries Portfolio.
Momentum and Sentiment bounced back in May
Momentum and Sentiment bounced back in May, while Value and Quality struggled.
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