Elston supports UK financial advisers CIP/CRP/MPS
  • WHO WE ARE
    • About
    • Our Journey
  • WHAT WE DO
    • Elston Portfolios >
      • Our Portfolios
      • Adaptive Portfolios
      • Retirement Portfolios
      • Sustainable Portfolios
      • Multi-Asset Income
      • All Weather Portfolio UK
      • Money Market Portfolio
    • Custom Portfolios >
      • Custom Portfolios
    • CGT Solutions >
      • Our CGT Solutions
      • GIA Portfolios
      • Onshore Bonds
      • Direct Gilts
    • Adviser Support >
      • Our Adviser Support
      • CIRP
      • Investment Committee Support
      • Regulatory Support
      • Analytics, Factsheets & Reporting
      • CPD
    • Fund Solutions >
      • Our Funds
      • Custom Funds
    • Index Solutions >
      • Our Indices
      • Sector Equal Weight
      • UK Equity Income
      • Liquid Real Assets
      • Gold and Precious Metals
      • Custom Indices
  • WHO WE HELP
    • Financial Advisers
    • Discretionary Managers
  • Insights
  • Contact

Asset Allocation Research for UK Advisers

Sector Investing In Febrile Markets

28/1/2019

 
Picture
  • Amidst market uncertainty, there is a need to consider positioning if required to remain fully invested in equities
  • A sector perspective enables investors to make nuanced adjustments to their equity portfolio
  • Consumer Staples provide lower volatility and Utilities provide reduced correlation relative to World Equity Markets

Anywhere to hide?
For investors with a broad mandate, asset allocation decisions between equities, alternatives, bonds and cash and equivalents gives scope to limit the impact of market volatility.
But what about for mandates which necessarily must remain fully invested in equities.
Within the equity sleeve, we believe a sector perspective enables investors to make nuanced adjustments to their equity portfolio.

Lower volatility
On a one year basis, the lowest volatility sector is Consumer Staples with a volatility of 11.6% compared to 13.3% for World Equities.  Consumer Staples is nonetheless 75.1% correlated to world equities.

Potential Diversifier
Over the last two years, Utilities has shown both lowest beta (0.52) and lowest correlation (52.8%) to world equities.  This makes the Utilities sector a potential diversifier within a portfolio context. 

Chasing growth?
From a momentum perspective, Technology remains the strongest performing sector with an annualised return over 3 years of +20.2% (in GBP terms).

Conclusion
Whilst economic outlook remains key driver for sector-based performance, the current volatility and correlation characteristics of specific sectors are informative from a portfolio construction perspective.


Source: Elston Research, Bloomberg. Indices used: MSCI World Index and MSCI World sector index data
Notes: Volatility: annualised 260 day volatility to 31-Dec-18; Correlation: 2 year correlation of daily returns to 31-Dec-18; all data expressed in GBP terms.

​Notices and Disclaimers:
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Additional disclosure: The data in this article comes from an Elston ETF Research report “Sector Equities: 4q18 Update” that was sponsored by State Street Global Advisors Limited.  We warrant that the information in this article is presented objectively.  For further information, please refer to important Notices and Disclosures in that Report which is available on our website www.ElstonETF.com
This article has been written for a UK audience. Tickers are shown for corresponding and/or similar ETFs prefixed by the relevant exchange code, e.g. “LON:” (London Stock Exchange) for UK readers. For research purposes/market commentary only, does not constitute an investment recommendation or advice, and should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product. This article reflects the views of the author and does not necessarily reflect the views of Elston Consulting, its clients or affiliates. For information and disclaimers, please see www.ElstonETF.com
Photo credit: N/A; Chart credit: Elston Consulting; Table credit: Elston Consulting

Comments are closed.

    ELSTON RESEARCH

    insights inform solutions

    Get our weekly newsletter

    Categories

    All
    All Weather Portfolio
    Alternative Assets
    Alternative Strategies
    Bonds
    Business Practice
    Capital Market Assumptions
    CPD
    Direct Gilts
    Equities
    Equity Income
    Equity Sectors
    ESG
    ETFs
    Evidence Based Investing
    Factor Investing
    Geopolitics
    Gold & Precious Metals
    Guide To Investing
    Index Investing
    Inflation
    Investment Trusts
    Macro
    MULTI ASSET
    Multi Asset Income
    Net Zero
    Outlook
    Permanent Portfolio
    Podcast
    Portfolio Construction
    Private Markets
    Real Assets
    Retirement Investing
    Risk Parity
    Thematic Investing
    Value Factor
    Video

    Archives

    June 2025
    May 2025
    April 2025
    March 2025
    February 2025
    January 2025
    December 2024
    November 2024
    October 2024
    September 2024
    August 2024
    July 2024
    June 2024
    May 2024
    April 2024
    March 2024
    February 2024
    January 2024
    December 2023
    November 2023
    October 2023
    September 2023
    August 2023
    July 2023
    June 2023
    May 2023
    April 2023
    March 2023
    February 2023
    January 2023
    December 2022
    November 2022
    October 2022
    September 2022
    August 2022
    July 2022
    June 2022
    May 2022
    April 2022
    March 2022
    February 2022
    January 2022
    December 2021
    November 2021
    October 2021
    September 2021
    August 2021
    July 2021
    June 2021
    May 2021
    April 2021
    March 2021
    February 2021
    January 2021
    December 2020
    November 2020
    October 2020
    September 2020
    August 2020
    July 2020
    June 2020
    May 2020
    April 2020
    March 2020
    February 2020
    January 2020
    December 2019
    November 2019
    September 2019
    June 2019
    April 2019
    March 2019
    February 2019
    January 2019
    December 2018
    November 2018
    October 2018
    September 2018
    August 2018
    July 2018
    June 2018
    May 2018
    April 2018
    March 2018
    February 2018
    January 2018
    December 2017
    November 2017
    October 2017
    July 2017
    May 2017
    March 2017
    February 2017
    January 2017
    November 2016
    October 2016
    September 2016
    July 2016
    June 2016
    May 2016
    February 2016
    January 2016
    August 2015
    June 2015
    January 2014
    June 2012

    RSS Feed

Company
Home
About
​Our Journey
​​​Contact
Terms of Use
​Our Solutions
​​Insights
​Our Portfolios
Custom Portfolios
​Retirement Portfolios
Our CGT Solutions
Our Funds
Custom Funds
Our Indices
Custom Indices
​Adviser Support
CIRP
Investment Committee Support
Regulatory Support
Analytics, Factsheets & Reporting
CPD


By client type:
For Advisers
For Discretionary Managers


© COPYRIGHT 2012-25. ALL RIGHTS RESERVED.
 Elston Consulting Limited (Company Registration Number 07125478) is registered in
England & Wales, Registered address:  1 King William Street, London EC4N 7AF
  • WHO WE ARE
    • About
    • Our Journey
  • WHAT WE DO
    • Elston Portfolios >
      • Our Portfolios
      • Adaptive Portfolios
      • Retirement Portfolios
      • Sustainable Portfolios
      • Multi-Asset Income
      • All Weather Portfolio UK
      • Money Market Portfolio
    • Custom Portfolios >
      • Custom Portfolios
    • CGT Solutions >
      • Our CGT Solutions
      • GIA Portfolios
      • Onshore Bonds
      • Direct Gilts
    • Adviser Support >
      • Our Adviser Support
      • CIRP
      • Investment Committee Support
      • Regulatory Support
      • Analytics, Factsheets & Reporting
      • CPD
    • Fund Solutions >
      • Our Funds
      • Custom Funds
    • Index Solutions >
      • Our Indices
      • Sector Equal Weight
      • UK Equity Income
      • Liquid Real Assets
      • Gold and Precious Metals
      • Custom Indices
  • WHO WE HELP
    • Financial Advisers
    • Discretionary Managers
  • Insights
  • Contact