Hedge Funds’ Cyclical vs. Defensive Positioning

Hedge Funds’ Cyclical vs. Defensive Positioning In times of expected economic growth, investors prefer cyclicals over defensives. The current record-low hedge fund exposure to cyclical vs. defensive sectors offers a potential opportunity for contrarian investors. Image: BofA Global Research

Stocks – Cyclicals vs. Defensives

Stocks – Cyclicals vs. Defensives In both the U.S. and Europe, cyclicals have seen greater inflows than defensives, reflecting an anticipation of economic growth. This expectation usually favors cyclicals over defensives. Image: Goldman Sachs Global Investment Research

U.S. Stocks – Cyclicals vs. Defensives

U.S. Stocks – Cyclicals vs. Defensives Investor sentiment is often reflected in the performance of cyclicals and defensives. The expectation of economic growth typically leads to a preference for cyclicals, resulting in their outperformance over defensives. Image: Goldman Sachs Global Investment Research

S&P 500 Valuation – Shiller’s Cyclically-Adjusted Price-To-Earnings (CAPE) Ratio

S&P 500 Valuation – Shiller’s Cyclically-Adjusted Price-To-Earnings (CAPE) Ratio The Shiller CAPE ratio is elevated relative to history. While valuation is not a reliable timing tool, investors should be mindful of the potential for lower future returns when valuations remain high for an extended period. Image: Morgan Stanley Research

MSCI Cyclicals/Defensives Ratio

MSCI Cyclicals/Defensives Ratio Is it still too early for investors to favor cyclicals over defensives? Image: The Daily Shot