Month-to-date all listed strategies are at a loss due to an increase in worries of a trade war between the U.S. and China. Suffering the worst losses month-to-date are Quality, Value, and High Dividend equities, while those suffering the least were less sensitive. Low-Volatility equities and conservatively allocated portfolios (i.e. Passive 70/30 – Conservative).
Comments on this week’s report:
- Over the trailing three months, High Dividend equities have underperformed all other listed 100% equity strategies (i.e. all but those listed as “Passive”) as significant exposure to health care stock dragged on its performance. Conversely, Sector Rotation and Quality have outperformed due to their overweighting to the technology sector.
- Year-to-date Sector Rotation has outperformed all other listed strategies as its high concentration in the technology and industrial sectors (which were among the top performing sectors in that time frame) has driven it higher. However, for that same reason Sector Rotation has underperformed over the trailing 1-year period as its lack of diversification caused it to suffer a larger drawdown in the late 2018 market correction.
- Contrary to Sector Rotation, Low-volatility is outperforming all other listed strategies on a 1-year basis as it benefited from its relatively lower drawdown during the stock market correction at the end of 2018, while still participating in the more recent stock market rally.
- Quality based equities (which are measured on ROE, accrual ratio, and financial leverage) have performed relatively well in all time frames as it remains at the top of the heap, and narrows its gap between the best performing Sector Rotation on a year-to-date basis and surpassed Sector Rotation over the trailing three months.
- Momentum based equities have outperformed over the trailing 3-year and 5-year periods as during those time frames the stock market has primarily experienced upward momentum.