While global inflation has accelerated over the last few months, the expectation for some countries is that inflation has peaked while others anticipate further increases.

Industry and revenue lenses can provide additional insights to investors beyond a traditional sector analysis.

Inflation in the U.S. has accelerated over the last 18 months to a high of 8.5% in March (8.3% in April), a level that was last observed in the early 1970s.

Looking at sectors through a factor lens may provide additional insights for investors in terms of explaining performance.

Along with other factors, comparing current sector valuations to longer-term averages has helped investors as they make decisions about whether to rotate in or out of specific sectors.

Our research has shown that an industry momentum approach, which involves investing in industries with the best recent performance, outperformed broad-market equity indexes in developed-market regions from 2000 to 2021.

When considering new sector exposures in their portfolios, investors can review correlations between existing and potential allocations to better understand whether these sectors’ returns moved in the same direction or if exhibited a differentiated return pattern. 

U.S. Fed Chairman, Jerome Powell, has made it official: We can no longer label the period of current inflation as transitory. 

When investors construct portfolios, they may do so based purely on bottom-up stock selection, or they may incorporate an element of top-down construction by adjusting the portfolio’s allocation to sectors, countries or factors.