Which sectors when?

The impact of the economic cycle is not only important at the asset allocation level, it is also important to be aware of the historical returns between each of the major sectors of the sharemarket.

Different sectors do well in different economic conditions. A market that suits consumer staples and financials, for example, tends to see companies in the telecoms and oil and gas sectors not performing as well.

The above shows the annualised relative performance of each US equity sector versus the S&P 500 Index in the major economic phases prior to the latest downturn, from April 1973 to May 2006. We believe the US is currently in a recovery phase.

Of course, there is no guarantee that this pattern will hold true in every cycle in every market, but history shows that these trends are repeated over the long-term.

The above article has been sourced from FIL Investment Management (Australia) Limited. 

Important Information

The above information provides an overview or summary only and it shouldn’t be considered a comprehensive statement on any matter or relied upon as such. The above information doesn’t take into account your personal objectives, financial situation or needs. It’s important for you to consider these matters before making any financial decision and I recommend you seek help from a financial adviser.