Sector and Equity Compass Looking to a Brighter World Q3 2021

State Street Global Advisors
By August 3, 2021 11:01

Sector and Equity Compass Looking to a Brighter World Q3 2021

Starting to play again

Finishing Q2 on a High

Developed equity markets ended June at record highs, reassured by signs of steady recovery and greater belief that inflation was transitory, thus delaying any necessary rate rises. Europe’s catch-up was also a major focus and returns on the continent outpaced those of US equities. Flows into equity ETFs have been strong, reflecting investors’ bullish sentiment.

Relative performance in Q2 was initially driven by two factors: sensitivity to inflation (with a sector’s inflation beta acting as a good predictor) and beneficiaries of reopening and recovery, with investors looking for parts of the market that had been left behind or slower to recover. However, these trends broke down in June.

We have highlighted the high return dispersion between sectors this year and it remains above median over one month and six months. Indeed, sector investing is proving a favoured means of profiting from the current environment, as reflected in high net inflows. In this Compass, we look at sectors and different geographical equity exposure to play our themes

State Street Global Advisors
By August 3, 2021 11:01

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