Note July 27,2018: Q3/2018 – Much Ado About A Lot. Unlike the experience of recent years, friction between fiscal policy and monetary strictures have been more of a norm within which capital markets operate, most recently into the 1990s. It makes risk premium vigilance necessary. Given the size and duration of quantitative ease fostering complacency, reversion to more normal conditions would likely be uncomfortable for many strategies of politics and investment. With apparently little focus in aggregate on fixed income aspects like country deficits or equity aspects like the interface between valuation and deliverable growth, markets appear momentum driven still and depending on little from current conditions. However, some markets aspects appear to be evolving and not just beneath the surface.
With Fed Funds potentially rising to 3 ½% and irrespective of the durability of 4% U.S. GDP growth, rather than seamless transition, we expect a rising interface of policy and market volatility to prevail well into 2019. It is likely to be an interplay in political economy of a type prevalent decades ago. It would be unlike the immediate decade of 2008-18 in which massive quantitative ease has meant a less classic business cycle. In fixed income, we would focus upon shorter term maturities. Monetary policies appear clearer in the United States and smaller advanced countries. Both should be favored over those in Europe and Japan. Anticipating higher currency volatility as interest rates change, especially from U.S. policy, quality is likely to be particularly a factor in emerging market debt.
On growth versus value as well as of defensive versus interest rate sensitive performance , equity parameters seem mixed for sector and geographic allocations. For example, in our overweight Information Technology sector are present both high valuation and now volatile concept mainly social media components as well as strong growth but also the strong in financial structure and low valuation components that we favor over Healthcare in consolidation after massive M&A activity. Supposedly defensive growth Consumer Staples face both business change and high valuations as well as. In cyclicals, we favor Industrials for capital/infrastructure goods over Consumer Discretionary under business pressure despite stronger global economic growth. For diversification amid the potential for currency volatility and given the mature phase of this cycle amid trade strife, we also overweight Materials. Energy represents a value proposition amid commodity price recovery.
Massive quantitative ease appears to be changing from the Federal Reserve and potentially others, including the European Central Bank. Quality of operating delivery and strength of financial structure appear as key. In yield amid the potential for sustained U.S. interest rate increases into 2019, we favor restructured Telecommunications Services over Utilities or Real Estate. In the Financials, sector weightings appear geographically significant but strong bifurcation appears between those that restructured early and strongly versus laggards for example in Europe. On geographical sector weightings, markets in Europe and in Japan collectively each have close to 40% weightings in consumer and Healthcare areas as well as 5% or less in Information Technology where business growth appears strong. Instead of equity rotation to overweighting Europe and Japan at this stage, balance to U.S. and emerging market exposure can be achieved via commodity rich areas like Australia and Canada among others. We believe that above benchmark cash is appropriate. As portfolio hedge, we also espouse precious metals and underweight real estate.
Asset Mix
Rather than seamless and dispassionate statistically led transition, we expect a rising risk of interface of policy and market volatility to prevail well into 2019. It is likely to be linked to an interplay in political economy of a type more prevalent decades ago. It would be unlike the immediate decade of 2008-18 in which massive quantitative ease has so far meant a less classic business cycle, especially as it relates to interest rates. In fixed income, we would focus upon shorter term maturities. Monetary policies appear clearer in the United States and smaller advanced countries. They should be favored over those in Europe and Japan. Anticipating higher currency volatility as interest rates change, especially from U.S. policy, quality is particularly likely to be a factor in emerging market debt.
Unlike the two decades of restructuring into the early 2000s, many current governments appear to continue to be dancing while the music plays rather than using a decade of ample liquidity to readjust fiscal posture. Politicians generally prefer to operate on promises but sovereign financing issues could be the backdrop for a potential cycle of risk reassessment, whether proactive or forced. The sovereign financing and political crises of Latin America and southern Europe have attracted attention. However, other debt aspects also loom. The debt-to-GDP ratios of Japan cannot be indefinitely brushed aside. Nor can the potential $ 1 trillion plus annual deficits projected for example by the Congressional Budget Office and others as being the likely result of present U.S. federal budget policy. Nor for that matter can be overlooked the credit excesses of emerging countries including China and India, despite their stronger than global average GDP growth. As well, elevated private (including corporate) debt structures have emerged amid quantitative ease of such size and duration.
Further into 2019, a number of elections and political developments appear amid an unmistakable rise of populist chauvinism. Increased political confrontations are a likely and present risk. In Asia, such risks include developments in its east, around the south China seas and the Korean peninsula as well as elections in India by mid-2019. European politics appear in flux currently, not just about relations with the United Kingdom but also within the continent on issues like migration. Ahead of its November mid-term elections in 2018, the United States appears to also be willing to engage its allies and China alike in trade/ tariff wars. Being obtuse about discussions with North Korea and Russia has led to internal U.S. friction. Revocation of U.S. acceptance of the Iran nuclear agreement appears adding fuel to turmoil in an already violent LeVant.
Major central banks have been evaluating and explaining their policies. Change about quantitative ease looms in 2018. It ranges from the Federal Reserve being on a path of reduction of quantitative ease as most recently delineated in its July 2018 semi-annual Monetary Policy Testimony to Congress. The path is likely to continue irrespective of the durability of 4% GDP growth reported for the United States for Q2/2018. Being data driven has become of heightened performance amid rising deficits. It underscores a series of moderate rate hikes as being likely to be of 25 basis points each as well as a reduction in the size of its balance sheet now close to $4.5 trillion, compared to under $ 1 trillion before the flaring of credit crisis a decade ago. Other central banks are also at various but salient points. With an expanded balance sheet of close to Euro 2.5 trillion, after its late July 2018 meeting, the European Central Bank has been reiterating cutting back asset purchases from September 2018 but also that its administered rates could remain close to zero until late 2019. With the longest running quantitative ease program and now with a balance sheet ballooned to Yen 540 trillion, the Bank of Japan appears obtuse still but also signaling concern about the efficacy of current policy linked to quantitative ease. In between these stance alternatives, many other advanced country central banks appear.
In emerging countries, large and both strong growth countries China and India have had weakened currencies amid credit stress lately but have differing monetary slants. India has been raising rates amid a banking scandal while China has been easing amid a trade tussle with the United States. Other emerging countries may also be in between but severe monetary crisis exists currently in countries like Argentina, Brazil, Venezuela and Turkey. In its annual Economic Report of June 2018, the Bank for International Settlements (BIS) does point to a narrow path away from depending on quantitative ease. It discusses lurches in risk appetite reversal and rising fixed income yields as risks for stretched capital markets. It points to protectionism risk as well. More attention is needed about the role in systemic risk of prolonged minuscule rates stoking fiscal complacency. Events amply demonstrate that flareups can and do occur. Our experience is that central banks have not perforce had the control over fixed income markets that many participants currently appear to assume in their risk premium assessments.
Unlike the experience of recent years, friction between fiscal policy and monetary strictures have been more of a norm within which capital markets operate, most recently into the 1990s. It makes risk premium vigilance necessary. Given the size and duration of quantitative ease that appears to have given rise to complacency, reversion to more normal conditions would likely be uncomfortable for many strategies of politics and investment. With apparently little focus in aggregate on fixed income aspects like country deficits or equity aspects like the interface between valuation and deliverable growth, markets appear as still being momentum driven and depending on little change from current conditions.
However and not just beneath the surface, some markets parameters do appear to be evolving. In the earlier stages of quantitative ease, wide swathes of fixed income and equities benefitted and prices moved up sharply. Risk on and risk off phraseology came into the vernacular. Quantitative and algorithmic positioning appeared to gain while security selection suffered in relative performance. On massive central bank ease worldwide, low quality benefitted in capital market liquidity and pricing, whether in corporate or country based securities. Currently while markets still seem to wax or wane on anticipation of movements or even whispers thereof in quantitative ease, security performance has become more nuanced and mixed. In fixed income where the United States has long served as benchmark, we believe that on being data driven, with U.S. GDP growth stronger and inflation above 2% as well as unemployment under 4%, Fed Funds rates could reach 3 ½% into Q2/2019, along with 10 year Treasury Note yields closer to 4 ½%.
Rather than uniformity of delivery on investment style, bifurcation appears. In fixed income, despite sharp and often intraday movements, U.S. Treasury and in particular long dated instrument yields have moved closer to 12 month highs as have those of BBB corporate yields. Oddly, CCC corporate yields have not, despite potentially being more vulnerable to systemic contraction in global liquidity. Meanwhile, emerging market debt has suffered, in some cases like Turkey and Argentina in being driven into crisis territory. Meanwhile in Europe even with ECB backing, yields for countries like Italy have risen sharply but those for Germany remain comatosely minuscule in absolute and relative to U.S. benchmark terms. In Japan, even whispers of potential change have been enough to double the admittedly microscopically low bond yields and towards eighteen month highs. We believe liquidity driven flareups have the potential to be acute in fixed income and currency markets.
Into July 2018, large daily and intraday equity index point moves across markets suggests that momentum behavior remains strong and illustrates paucity in the proposition of markets being efficient. Notwithstanding stronger global GDP growth, the widely telegraphed consensus expectation of evolution did not occur in the advanced markets into lower valuation Japan and Europe outperforming the equity markets of the United States. Despite stronger economic growth, emerging markets were also relatively poor performers. Indeed in many equity markets globally and despite their different characteristics, equity valuation remains elevated at levels that indicate complacency. It likely has added to the imbalance in favor of momentum over value. It also likely means that any change in political, central bank policy or fundamental factors would enhance volatility that thus far has appeared to be sedate but has also been periodically flaring in the capital market extremities.
On the perennial equity market performance metrics of growth versus value as well as of defensive versus interest rate sensitive segmentation , the parameters seem mixed for both sector and for geographic allocations. For example, in our overweight Information Technology sector are present both high valuation concept mainly social media components that were high flying and now heavily hit as well as strong growth but also strong in financial structure and low valuation components that we favor over Healthcare in consolidation after massive M&A activity. Meanwhile, while supposedly defensive Consumer Staples face both business change and high valuations. In cyclicals, we favor Industrials as capital /infrastructure goods suppliers over Consumer Discretionary that are in severe business change despite stronger global economic growth. For diversification amid the potential for currency volatility and given the mature phase of this cycle amid trade strife, we overweight Materials. Energy represents a value proposition amid commodity price recovery.
A decade into massive quantitative ease that appears to be changing led by the Federal Reserve and potentially others including the European Central Bank, in yield, we favor restructured Telecommunications Services over Utilities or Real Estate. Ahead looms the potential for sustained U.S. interest rate increases into 2019. In the case of the critical Financials, bifurcation appears to be strong between those that restructured early and strongly versus laggards for example in Europe. In the Financials, sector weightings are significant geographically. On geographical sector weightings, markets in Europe and in Japan collectively each have close to 40% weightings in consumer and Healthcare areas as well as 5% or less in Information Technology where business growth appears strong. Instead of equity rotation to overweighting Europe and Japan at this stage, balance to U.S. and emerging market exposure can be achieved via commodity rich areas like Australia and Canada among others. We believe that above benchmark cash is appropriate. As portfolio hedge, we also espouse precious metals and underweight real estate.
Equity Mix
Into July 2018, on a daily and intraday basis, large index point moves have been recorded across equity markets. It suggests that momentum behavior remains strong and illustrates paucity in the proposition of markets being efficient. Despite stronger global GDP growth, the widely telegraphed consensus expectation of evolution did not occur in the advanced markets into lower valuation Japan and Europe outperforming the equity markets of the United States. Despite stronger economic growth, emerging markets were also relatively poor performers. Despite differing points in their domestic business cycle and characteristics, in many equity markets worldwide, valuation remains elevated at levels that indicate complacency. For example for the S&P 500, it is about long term delivery of 12% annual operating earnings growth compared to historical delivery of closer to 7% per year. In this earnings reporting cycle and so consistently over numerous quarters recently, the high percentage of companies being able to chalk up beating consensus has detracted from the information content of the metric, except in extreme circumstances. Amid message massaging, such reporting likely has added to an imbalance in favor of momentum over value. It also likely means that any change in political involvement, central bank policy or fundamental factors would enhance volatility that thus far has appeared sedate but demonstrated flaring at extremities.
On the perennial market performance metrics of growth versus value as well as of defensive versus interest rate sensitive comparisons , the parameters seem mixed for both sector and for geographic allocations. For example, in our overweight Information Technology sector are present both high valuation, erstwhile high flying and recently sharply dropping concept mainly social media components as well as strong growth but also strong in financial structure and low valuation components that we favor. Amid stronger economic growth, many retail areas face new technological business changes. In the case of the defensive reputation of staples, already high valuations detract from such. In the case of the Financials which are critical in many markets, bifurcation appears to be strong between those that restructured early and strongly versus laggards for example in Europe.
A decade of massive quantitative ease now appears to be past its peak, led by the Federal Reserve and potentially others including the European Central Bank. Quality of operating delivery and financial strength are likely to generally be key. On geographical sector weightings, markets in Europe and in Japan collectively each have close to 40% weightings in consumer and Healthcare areas as well as 5% or less in Information Technology where business growth appears strong. We believe that above benchmark cash is appropriate but also that instead of rotation to overweighting Europe and Japan, balance to U.S. and emerging market exposure can at this stage be achieved via commodity rich areas like Australia and Canada among others.
The restructuring of the business of consumer spending has deepened phase and we underweight Consumer Discretionary, despite its importance in many economies. For business and valuation reasons, we see Consumer Staples as being far from defensive in the current cycle and are underweight. Amid a paucity of value alternatives and potentially the purchase of attractive long term assets, we are overweight Energy but with focus on the stronger companies. We see the Financials currently as critical to the capital markets and are overweight on those earliest into wrenching restructuring while others lag. Balancing growth in Information Technology against the need for consolidation in Healthcare, we have underweight Healthcare. Politics have long intervened in Healthcare and its ability to deliver returns for investors. In a world of good growth close to 4% annually for GDP, tariff risk and urgent need for infrastructure expansion, within cyclicals we have overweight the Industrials as being less hard pressed by changed business conditions than are the consumer areas. We would keep our Industrials focus upon financial strength and on relatively tight product profiles. In a troubled world, defense spending is also likely to be expanding. Cloud computing and social media growth explosions have been attracting investments in Information Technology, replete with high valuations in concept areas but we would overweight Information Technology via a diverse mix of communications, software and hardware companies where lower valuations and strong financial strength are also present. We see precious metals as needed portfolio diversifiers and are overweight Materials generally on a maturing business cycle in which raw material can be expected to rise amid deficits and political machinations. We are underweight REITs. While REITs are less directly into massive single project real estate management, we are concerned about affordability in housing and about capacity needing to be redeployed in areas like shopping centers and commercial property. While acquiring content assets and after massive consolidations, , we believe Telecommunications Services to be better positioned in terms of growth and financial structure in comparison to alternates like Utilities. On impact from rate uncertainty at this point of the cycle, we have underweight Utilities for business and interest rate reasons.
Consumer Discretionary: The restructuring of the business of consumer spending has entered into a more extensive phase. We underweight Consumer Discretionary, despite its importance in many economies. The restructuring of the business of consumer spending initially had to do with changing demographics as populations aged in advanced economies and wealth increased for most demographics but especially in the middle class in emerging economies. Change now has expanded as mall spaces in advanced economies had excess capacity and also had to introduce experiences as an offering. In emerging economies, in addition to experiences, the glitter of malls was a new phenomenon for many and contrasted to more chaotic street shopping. It resulted in many cases in excess capacity as well. Further, internet based companies from startups to massive giants have been penetrating into increasing numbers of core retail businesses well beyond books and pencils for instance and into electronics and medications and fashion to name but a few. Meanwhile, increased salvos of tariffs in a potential trade war among countries from raw materials to finished goods mean that global logistics and manufacturing chains are under stress. Despite global growth being close to 4% per year in GDP with tariff risk, we see the restructuring of consumer discretionary as being still in a volatile phase.
Consumer Staples: For business and valuation reasons, we see Consumer Staples as being far from defensive in the current cycle and are underweight. As quantitative ease suppressed alternate fixed income yields in the markets, the stretching for income by investors meant that attention focused upon and drove up valuation in Consumer Staples. Meanwhile, business misjudgments by global Consumer Staples about product growth and the strength of local competitors in emerging markets especially have meant that brand pruning has once more become a necessity. In the 1990s such restructuring took years to accomplish and the stratification of revenue growth was extensive in exposing winners and laggards. At present, business issues such as Brexit imperatives in Europe, the ability of internet based companies to force product pricing cuts and the impact of trade wars on raw material costs are likely to be important Consumer Staples restructuring issues.
Energy: We view $60-70/Bbl. WTI as representing an adequate balance between politics that never far from energy, consumer demand and the expansion of energy alternates to hydrocarbons. Crude oil as a commodity remains volatile in having swung in just a few years up to $145/Bbl. WTI to down close to $25/Bbl. and then up beyond our range towards $75/Bbl. WTI as well as close to $80/Bbl. Brent to now back into our range. On politics, the mix between Russia and Saudi Arabia as major producers trying to stabilize markets contrasts with the ongoing and virulent tussle between large producers Iran and the United States on a wide range of issues from nuclear agreements to the ongoing conflagration on political power engulfing the Levant. Meanwhile, subsidization of alternate energy appears losing support, climate change notwithstanding. Furthermore, natural gas turbine demand for electricity generation has appeared tepid, notwithstanding the reputation of natural gas as a cleaner energy source, compared to crude oil or coal. On corporate results, reporting has appeared bifurcated, from giant companies to highly leveraged shale oil exploration companies that were initially hard hit when oil prices dropped from their all-time highs. However, amid a paucity of value alternatives in current markets and anticipating better business prospects including the purchase of attractive long term assets, we are overweight Energy but focused on the stronger companies already demonstrating superior business performance.
Financials: While there have been prolonged periods in this cycle in which capital markets have glossed over their performance, we see Financials currently as critical. In addition to net interest margins for banking, continued issues relate globally to debt and credit quality, balance sheet strength bifurcation among the Financials and the potential impact of changes in quantitative ease. Events in Asia demonstrate that strong growth in large economies like India and China in the 6 ½ – 7 ½ % GDP range per year have not alleviated credit pressures. The Peoples’ Bank of China has needed to inject reserves and the RMB has slipped. In India, despite raising rates, the Reserve Bank of India has a slippage in the Rupee and large levels of non-performing loans as well as financing malfeasance to deal with. In Britain, Brexit has been muddying the structures for its major banks and its position as an international hub. In Latin America, several countries do have financial stress as does Turkey among many other emerging countries. In Europe even as the European Central Bank mulls tapping down quantitative ease now totaling Euro 2.5 trillion, German and Italian as well as other banking leaders have severe capital strengthening and loan recognition issues to deal with. The Bank of Japan appears still obfuscating as inflation is low but quantitative ease less than helpful and its banks appear similarly ambivalent. While the Federal Reserve has clearly signaled a series of moderate rate hikes and lesser quantitative ease amid a stronger economy, the gains of its financials have been far from universal. We are overweight the Financials but even a decade into this cycle, the advantages still likely lie with those strongly financed and those furthest along in wrenching restructuring for a changed environment.
Healthcare: Healthcare programs have some form of government and institutional financing and costs have been rising. Thus, politics have long intervened in Healthcare and its ability to deliver returns for investors. The ageing of many populations have exacerbated these issues as have government deficits. For several years, restructuring in Healthcare businesses has included the cutting back of redundant programs and practices like incentive payments. Merger and Acquisition (M&A) activity has restructured traditional pharmaceutical companies, fast growing biotechnology, medical devices and services. We believe that the focus within Healthcare is now likely to focus upon the consolidation of such wrenching change. Balancing growth in Information Technology against the need for consolidation in Healthcare, we have opted to underweight Healthcare.
Industrials: In a world of growth close to 4% annually for GDP with tariff risk and an urgent need for infrastructure expansion, within cyclicals we have opted to overweight the Industrials as being less hard pressed by changed business conditions than are the consumer areas. However, in the much touted Silk Road initiative for example, while funding has been available and led by China, much more fragile of its long term servicing has appeared by the individual country recipients of such sums. Also, in the reality of the present environment of global supply chains, the threatened introduction of tariffs into a wide variety of finished and intermediate goods does add to business uncertainty across capitalization levels. Furthermore, conglomerates have shown the stresses of delivering operating returns in diverse businesses. These have been occurring from advanced area with low interest rates like the United States, Europe and Japan to faster growing emerging regions that nonetheless have credit quality stress. We would keep our Industrials focus upon financial strength and on relatively tight product profiles in the capital goods/infrastructure space. In a troubled world, defense spending is also likely to be expanding.
Information Technology: Cloud computing and social media growth explosions have been attracting investments in Information Technology, replete with high valuations in concept areas which have also experienced strong upswings and then more recently, sharp falls in equity pricing. Artificial intelligence and a next step to 5G enabling semiconductors have been attracting investments and M&A for growth. However, there has also been also a renewal of political/strategic rivalries especially between China with its 2025 blueprint ambitions and the United States as the presently dominant entity. These rivalries and security concerns extend from final product production such as mobile phones to networking equipment suppliers to intermediate products like semiconductors as well as down to raw materials like rare element supply. Software and cyber security represent yet another area of expansion and of security concerns for companies and countries alike. Amid political dimensions that are currently rearing up, we would favor Information technology overweighting via a diverse mix of communications, software and hardware companies where lower valuations and strong financial strength are also present.
Materials: In addition to steel and aluminum, tariff tussles and strategic concerns being raised thereof have also had the ancillary affect of raising newsprint and lumber pricing. In food supply, the injection of tariff and counter-tariff movements does appear to be tightening up pricing there as well. After the overgorging of the last cycle, the subsequent restructuring that has now been underway for several years from base metals to chemicals and moving upward into a mature phase of the global business cycle has meant that materials’ prices could be expected to rise. Despite these heightened price movements and elevating political tensions, precious metals appear lagging. Higher U.S. dollar exchange rates amid the potential for higher interest rates and lesser quantitative ease led by the Federal Reserve have been expounded upon as reasons for such flaccidity. Still, we see precious metals as being potential portfolio diversifiers. We are overweight Materials generally for a maturing business cycle in which raw material can be expected to rise and even enhanced by political machinations that appear far from over.
REITs: While REITs in structure and management are less directly into massive single project real estate management, we are concerned about affordability in housing and about capacity needing to be redeployed in areas like shopping centers and commercial property. In office space, the emergence of new technologies of communications for example could accelerate obsolescence of older structures. In addition, the clarity of U.S. Federal Reserve policy and potentially other major central banks of reducing quantitative ease and raising interest rates could affect funding and servicing costs as well as increasing the capital market competition to REITs from alternates. We expect that at present inflation and growth rates in the United States, on being data driven and irrespective of the durability of close to 4% US GDP growth, Fed Funds rates of 3 ½ % as peak would be appropriate and could be in place towards the start of Q2/2019 with 10 year Treasury Notes at potentially 4.50% in yield. We are underweight REITs.
Telecommunication Services: After excess expansion into 1999, at least two phases followed as Technology, Media, Telecommunications (TMT) concept euphoria burst. They were the collapse of some companies, amid scandals and then the restructuring of footprints globally of Telecommunications Services. Lately gaining speed has been a third phase of the acquisition of content assets, even as wireless communications and the usage of media expands. All of these initiatives remain expensive, not least in terms of the facilities expenditures up front and likely to be required into the future. Still and after massive consolidations, in comparison to alternates like Utilities, we believe Telecommunications Services to be better positioned in terms of growth and financial structure. We are overweight Telecommunications Services using our common overall portfolio theme of favoring those strongly restructuring and with strong balance sheets.
Utilities: We have underweight Utilities for business and capital market reasons. The business challenges and investments required for cleaner energy have been substantial, in traditional, natural gas as well as alternate energy facilities while the political will appears flagging for freer movements in final unit pricing. The same has been even more true in water facilities which also have essential-to-life expectations associated with them. As such, the more appropriate opportunities in energy and clean water demand are likely to lie in the providers of equipment via the Industrials space. In terms of Federal Reserve policy of lesser quantitative ease and moderate rate increase stance, the full effects are likely to be global in terms of financing costs as well as currency volatility. On impact from rate uncertainty as well, we have underweight Utilities for this point of the cycle. Pipelines also represent opportunity in the tradeoffs between environmental concerns versus demand growth.
Asset Mix
Global U.S.
Equities-cash 52% 57%
-priv. 6 6
Fixed Income 25 20
Cash 12 12
Other 5 5
Total-% 100 100
Geographic Mix
Currency/ Equities Fixed Cash
Real Income
Americas 61% 65% 67% 55%
Europe 22 20 26 37
Asia 9 13 6 3
Other 8 2 1 5
Total -% 100 100 100 100
Global U.S. Stance
Cons. Disc. 6.5% 5.5% Under-weight but favor entertainment
Cons. Stap. 5.0 5.0 Under-weight on valuation excess
Energy 12.0 13.0 Over-weight via strong companies
Financials 19.0 16.0 Over-weight restructuring leaders
Healthcare 9.0 12.0 Under-weight as M&A needs delivery
Industrials 13.0 13.0 Over-weight for capex recovery
Info. Tech. 19.0 23.0 Over-weight basic over social
Materials 8.0 5.0 Over-weight broadly
REITS 2.0 2.0 Under-weight esp. retail space
Telecomm. 4.5 3.5 Over-weight on refocus delivery
Utilities 2.0 2.0 Under-weight but favor pipelines
Total-% 100.0 100.0 () prior weight
StrategeInvest’s independent consultancy operates as Subodh Kumar & Associates. The views represented are those of the analyst at the date noted. They do not represent investment advice for which the reader should consult their investment and/or tax advisers. Any hyperlinks are for information only and not represented as accurate. E.o.e.