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New
US Strategy Comment: Industrials Remain a Top Pick, but Selectivity Is Key
Summary: We Expect Industrial Outperformance to Persist
Industrials have been one of our top sector picks for several years. While relative performance trends have fallen in and out of favor, our fundamental framework has continued to support our optimism. And despite YTD outperformance, Industrials have been one of the hardest hit areas in terms of fund outflows. We believe investors are making a mistake in this regard. In fact, our work suggests that outperformance is likely to persist throughout the year, but sector dynamics suggest that investors should be highly selective within the sector when looking to increase exposure.
Main Points:
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Investors Appear to Be Unimpressed With Sector Prospects
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Despite continued YTD outperformance, Industrials have exhibited the third-worst sector fund outflows
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Favorable Sector Fundamentals Remain Intact
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Our three main fundamental models continue to suggest a healthy backdrop for the sector
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Industrials have recently rebounded from oversold levels, something that typically leads to outperformance in the subsequent months
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Selection Model Indicates an Active Approach Is Warranted
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Almost every industry within the sector is exhibiting a high degree of valuation dispersion, which based on our analysis, suggests a highly selective stock picking approach is warranted
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GARP Can Be a Successful Strategy Given the Market Environment
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GARP has always been one of our favorite investment philosophies and appears to work very well within Industrials
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Read more
Research & Strategy
June 20, 2019
Brian, Chief Investment Strategist and leader of the Investment Strategy Group, provides strategic investment and portfolio management advice to both institutiona...
VIEW FULL PROFILE
Research & Strategy
June 20, 2019
Summary: We Expect Industrial Outperformance to Persist
Industrials have been one of our top sector picks for several years. While relative performance trends have fallen in and out of favor, our fundamental framework has continued to support our optimism. And despite YTD outperformance, Industrials have been one of the hardest hit areas in terms of fund outflows. We believe investors are making a mistake in this regard. In fact, our work suggests that outperformance is likely to persist throughout the year, but sector dynamics suggest that investors should be highly selective within the sector when looking to increase exposure.
Main Points:
-
Investors Appear to Be Unimpressed With Sector Prospects
-
Despite continued YTD outperformance, Industrials have exhibited the third-worst sector fund outflows
-
-
Favorable Sector Fundamentals Remain Intact
-
Our three main fundamental models continue to suggest a healthy backdrop for the sector
-
Industrials have recently rebounded from oversold levels, something that typically leads to outperformance in the subsequent months
-
-
Selection Model Indicates an Active Approach Is Warranted
-
Almost every industry within the sector is exhibiting a high degree of valuation dispersion, which based on our analysis, suggests a highly selective stock picking approach is warranted
-
-
GARP Can Be a Successful Strategy Given the Market Environment
-
GARP has always been one of our favorite investment philosophies and appears to work very well within Industrials
-
Read more
Brian, Chief Investment Strategist and leader of the Investment Strategy Group, provides strategic investment and portfolio management advice to both institutiona...
VIEW FULL PROFILE
BMO Capital Markets is a trade name used by BMO Financial Group for the wholesale banking businesses of Bank of Montreal, BMO Harris Bank N.A. (member FDIC), Bank of Montreal Europe p.l.c, and Bank of Montreal (China) Co. Ltd, the institutional broker dealer business of BMO Capital Markets Corp. (Member FINRA and SIPC) and the agency broker dealer business of Clearpool Execution Services, LLC (Member FINRA and SIPC) in the U.S., and the institutional broker dealer businesses of BMO Nesbitt Burns Inc. (Member Investment Industry Regulatory Organization of Canada and Member Canadian Investor Protection Fund) in Canada and Asia, Bank of Montreal Europe p.l.c. (authorised and regulated by the Central Bank of Ireland) in Europe and BMO Capital Markets Limited (authorised and regulated by the Financial Conduct Authority) in the UK and Australia.