(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:
Black Bear Value Fund update for the month ended November 30, 2022. Q3 2022 hedge fund letters, conferences and more Dear Partners and Friends, Black Bear . . . SORRY! This content is exclusively for paying members. SIGN UP HERE If you are subscribed and having an account error please clear cache and cookies if 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.