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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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Brian is the Chief Investment Strategist and leader of the Investment Strategy Group, provides strategic investment and portfolio management advice to both i...
VIEW FULL PROFILESummary: 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
-
Brian is the Chief Investment Strategist and leader of the Investment Strategy Group, provides strategic investment and portfolio management advice to both i...
VIEW FULL PROFILE
US Strategy Snapshot: Steer clear of sell in May investment strategies
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