Hedge Funds’ Cyclical vs. Defensive Positioning During economic expansion, investors favor cyclicals over defensives. The current low hedge fund exposure to cyclical vs. defensive sectors may present a potential opportunity for contrarian investors. Image: BofA Global Research
U.S. Stocks – Cyclicals vs. Defensives Investor sentiment is often mirrored in the performance of cyclical and defensive equities. The anticipation of economic expansion usually prompts a preference for cyclical stocks, causing them to outperform defensive stocks. Image: Goldman Sachs Global Investment Research
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
Cyclical Sectors’ Relative Performance vs. Defensive Sectors Around the First Fed Cut After the first Fed interest rate cut, defensive stocks have historically shown stronger performance relative to cyclical stocks. Image: BofA US Equity & Quant Strategy
Indexed Return of Cyclicals vs. Defensives ex. Commodities and ISM Manufacturing Index Equity industry rotations are pricing in a soft landing. Image: Goldman Sachs Global Investment Research
MSCI Cyclicals/Defensives Ratio Is it still too early for investors to favor cyclicals over defensives? Image: The Daily Shot
ISM Manufacturing PMI vs. Cyclicals/Defensives Ratio Could the ISM Manufacturing PMI fall into contraction territory? Image: The Daily Shot
Cyclical/Defensive Equities Ratio vs. 10-Year Treasury Yield The 10-year U.S. Treasury yield and the cyclicals/defensives ratio have decoupled. Image: Morgan Stanley Research
Cyclical to Defensives Stock Ratio and U.S. 10-Year Bond Yield The cyclical/defensives stock ratio points to economic weakness. Image: Morgan Stanley Research
Relative Valuations – Defensive Value vs. S&P 500 Defensive value continues to outperform and looks cheaper than the S&P 500. Image: Topdown Charts