(Low) Beta Domination by Jennifer Thomson, Gavekal Capital Blog
Over the last year, the beta factor explained 84% of movements in the developed world market– a figure that has jumped to 90% (and higher) over the last month:
What can past market crashes teach us about the current one?
The markets have largely recovered since the March selloff, but most would agree we're not out of the woods yet. The COVID-19 pandemic isn't close to being over, so it seems that volatility is here to stay, at least until the pandemic becomes less severe. Q2 2020 hedge fund letters, conferences and more At the Read More
Given rising concerns over the Chinese economy, tensions in the Middle East, and the Hermit Kingdom’s (supposed) hydrogen bomb-induced earthquake, it is not surprising to note that it is those stocks with the lowest beta that have outperformed:
Regular readers will note the familiar trend of counter-cyclical groups (like Health Care and Consumer Staples) dominating the overall market and, especially, cyclicals such as the Energy and Materials sectors:
Whether we look at this persistent preference for low beta, defensive names, the generalized malaise in global markets, or the potential for continued M&A in the Health Care sector, any evidence of a tradable change in last year’s trends is (so far) missing in action.