(Low) Beta Domination

(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:

 

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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:

Beta Domination

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:

Beta Domination

Beta Domination

Beta Domination

Beta Domination

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.

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