Chart of the Week: Are your defensives safe?
Traditional defensives have kept pace with economically sensitive sectors through the long and fitful post-crisis recovery. Some ‘defensives’ are decidedly expensive, and investors may need to broaden their search for safe havens.
Investors have been a cautious bunch throughout the fitful post-financial-crisis recovery, pushing up the price of traditionally defensive stocks in sectors like consumer staples, pharmaceuticals and tobacco. Though stocks have stage a recovery into the new year, investors are likely to remain jittery, but many defensives are now more expensive than cyclicals despite the latter being more highly geared to economic conditions.
We are concerned about the welfare of several of the more traditionally defensive sectors and encourage investors to think more creatively in the search for safe havens. There are some defensive plays in the traditionally cyclical sectors if you know where to look. Read more about the risks and opportunities we see in “Today’s defensives may not be fit for tomorrow”, one of the articles in our latest InvestmentInsight.