Articles by Greg Swenson, CFA Director of Equities

Among the bottom ranked sectors are Utilities, Materials, Energy, and Telecom Services. These four sectors have been the bottom four rated sectors for a minimum of eight months.

While most factors performed well during the January sell-off, those providing stability worked the best. Low Volatility, Profitability, and Size were notable outperformers.

The Attractive-rated groups outperformed the Unattractive groups by 15.5% in 2015. This is the third positive year in a row, and the best performance differential since 2008.

Groups within Info Tech and Health Care have been long time favorites; the Financials sector also looking more appealing of late. We are still anti-Commodity (for the third straight year).

For the third consecutive year (thus far), quantitative factors worked best within the Materials sector. Energy also saw success as the decline in oil hurt the same stocks as in 2014. Factors were least effective in Health Care and Telecom.

A snapshot of Automotive Parts & Equipment, Large Cap Biotechnology, and Reinsurance.

A reversal in momentum, driven by the oil and commodity stocks’ rebound, caused investors to take gains from Health Care positions. We’re still big fans of Health Care and think recent weakness is more of a correction within a sector bull market than the start of a full-fledged bear.

Despite one of its worst five-day performance stretches in early October, the Momentum factor bounced back nicely and performed well the rest of the month.

Airlines has spent only three months below “Attractive” since early 2012 and the group’s factor category scores continue to provide solid results. We also like the growth prospects for Drug Retail and Apparel Retail.

Our research shows that the best years to “Play The Bounce” are generally ones in which the stock market is heading down into the fourth quarter. We won’t rule out an allocation to the Bounce strategy in the weeks ahead.

Health Care, Consumer Discretionary, and Financials remain the top three rated broad sectors.

The Short Interest Ratio performs well as a factor; on both the long and short sides.

Advertising, Homefurnishing, Research & Consulting Services

Value and Profitability performed well during August. Market Cap was a surprise underperformer given the stock volatility.

IT’s overall sector rank has been falling recently. Growth has slowed, which has prompted downward earnings revisions, while valuation ratios have remained steady or gotten pricier.

Health Care, Consumer Discretionary, and Financials are the top three rated broad sectors.

Energy And Materials Driving Momentum Volatility

Looking at year-to-date factor performance, Sentiment is the best performing; Momentum and Growth have also performed well.

While we view the industry group selection as the most important decision, looking at the sector level rankings also helps us identify broad trends. Here we highlight the top two rated sectors, currently, which also represent a combined >40% weight in our Select Industries Portfolio.

Momentum and Sentiment bounced back in May, while Value and Quality struggled.