Global Debt Review
In Uncommon Truths, Invesco experts Paul Jackson and Andras Vig’s provide a regular in-depth look at the big topics impacting markets.
July 22, 2024
Article
Strategic Sector Selector - A cycle in transition
October 22, 2021
The rally in global equities stalled in the third quarter of 2021 after a bout of disappointing economic data pointed to a slowdown in the pace of growth. At the same time, supply bottlenecks and surging energy prices contributed to concern about higher inflation. We believe the economic cycle is going through an adjustment phase to more sustainable growth rates and expect inflationary pressures to peak in the next 12 months. Therefore, we remain biased towards cyclical assets with the caveat that we expect limited returns over the next 12 months. While we increase our allocation to cyclical sectors, we seek a balance between early- and late-cyclicals and exposure to growth and value factors. With this in mind, we tilt late-cyclicals to a slight Overweight, while we selectively shift to Overweights in consumer discretionary and technology. Finally, we reduce our allocations to defensive sectors, which we expect to underperform.
Changes in allocations:
- Upgrades: energy, travel & leisure (UW to N), basic resources, industrial goods & services, (N to OW), retailers, financial services (UW to OW)
- Downgrades: telecommunications, utilities (N to UW), food, beverage & tobacco, healthcare (OW to N), media (OW to UW)
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Data as of 30 September 2021 unless stated otherwise.
This document is marketing material and is not intended as a recommendation to invest in any particular asset class, security or strategy. Regulatory requirements that require impartiality of investment/investment strategy recommendations are therefore not applicable nor are any prohibitions to trade before publication. The information provided is for illustrative purposes only, it should not be relied upon as recommendations to buy or sell securities.
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