July 15, 2020 • Page 4 of 5
7. Original: Financials, technology and health care outperform utilities, real estate and consumer discretionary.
Update: Financials, technology and health care outperform utilities, energy and materials in the second half. For our original prediction, a basket of financials, technology and health care is down -3.2%, while one of utilities, real estate and consumer discretionary is trailing at -4.1%.1 Regarding our revised prediction, our list of favored asset classes didn’t change, and a basket of our least-favored asset classes is down significantly at -17.8% for the year.1 Technology and health care should continue to do well in an environment of quantitative easing, and financials as a sector appears undervalued to us. 8. Active equity managers outperform their indexes for the first time in a decade. This is the second of our predictions that did not change. As of the end of May, just over half of large cap U.S. managers beat their indexes.3 We think opportunities for active management from here are relatively high. In our experience, active managers generally have a tailwind when small stocks beat big stocks, non-U.S. stocks outperform, equity returns are relatively low, value beats growth, correlations are low, economic growth improves and interest rates rise. We think most of that will happen in the second half of 2020. First « 1 2 3 4 5 » Next
Update: Financials, technology and health care outperform utilities, energy and materials in the second half.
For our original prediction, a basket of financials, technology and health care is down -3.2%, while one of utilities, real estate and consumer discretionary is trailing at -4.1%.1 Regarding our revised prediction, our list of favored asset classes didn’t change, and a basket of our least-favored asset classes is down significantly at -17.8% for the year.1 Technology and health care should continue to do well in an environment of quantitative easing, and financials as a sector appears undervalued to us.
8. Active equity managers outperform their indexes for the first time in a decade.
This is the second of our predictions that did not change. As of the end of May, just over half of large cap U.S. managers beat their indexes.3 We think opportunities for active management from here are relatively high. In our experience, active managers generally have a tailwind when small stocks beat big stocks, non-U.S. stocks outperform, equity returns are relatively low, value beats growth, correlations are low, economic growth improves and interest rates rise. We think most of that will happen in the second half of 2020.
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