Retail Investors
Institutional Investors
Virtual Portfolios
Investment Consultants
About VFM
BOV Internet Banking Login
I want
About Us
Contact Us
Register to BOVAssetManagement.com/Login
Language:
EN
MT
...
...
...
Maximise Banner
Minimise Banner
BOV Balanced Portfolio Fund Accumulator
1.0694
BOV Balanced Portfolio Fund Distributor
1.0005
BOV Conservative Portfolio Fund Accumulator
0.9187
BOV Conservative Portfolio Fund Distributor
0.8221
BOV Growth Portfolio Fund
1.1209
Vilhena Euro Income Fund Accumulator
3.2279
Vilhena Euro Income Fund Monthly Distributor
2.3060
Vilhena Euro Income Fund Quarterly Distributor
1.0724
Vilhena Euro Liquidity Fund - Institutional
2.8987
Vilhena Euro Liquidity Fund - Retail
2.8691
Vilhena European Multi-Manager Fund
1.9631
Vilhena Far East Opportunities Fund
2.0358
Vilhena Global Themed Fund - EUR Class
4.1095
Vilhena Global Themed Fund - GBP Class
2.0489
Vilhena Global Themed Fund - USD Class
1.6959
Vilhena High Yield Fund - Euro
0.5834
Vilhena High Yield Fund - USD
0.7094
Vilhena Malta Bond Fund - Accumulator
596.6550
Vilhena Malta Bond Fund - Distributor
303.9560
Vilhena Malta Bond Fund - WMD Accumulator
599.0960
Vilhena Malta Fund - Accumulator
718.6420
Vilhena Malta Fund - Distributor
457.4200
Vilhena Malta Government Bond Fund - Accumulator
502.9480
Vilhena Malta Government Bond Fund - Distributor
272.2440
Vilhena Malta Government Bond Fund - WMD Accumulation
502.3650
Vilhena Maltese Equity Focus Fund - Accumulator
3.2100
Vilhena Maltese Equity Focus Fund - Distributor
2.4070
Vilhena Maltese Equity Focus Fund - ISC – Accumulation Shares
3.2050
Vilhena Maltese Opportunities Fund - Accumulator
9.9750
Vilhena Maltese Opportunities Fund - Distributor
6.3800
Vilhena Sterling Income Fund
0.8864
Vilhena US Multi-Manager Fund - Euro Class
1.0440
Vilhena US Multi-Manager Fund - USD Class
1.1167
Home
>
Investing in sectors or countries. What works best?
VFM Pjazza
Investing in sectors or countries. What works best?
Segwi | Tagħrif fuq l-Investiment Sostenibbli
Upscaling the Multi-Manager concept through Multi-Strategy investing
Five suggestions to better protect Maltese investors from Non-Timely Filings
BOV... Your companion through life
EFSI 2.0 – Can Malta leverage more funding?
Paving the way to electronic payments
European Money Week – Promoting Financial Literacy amongst Youths
The young Investor
Investor Sentiment Index
Investing in sectors or countries. What works best?
26 Aug 2018
next
Previous
A diversified portfolio across regions and sectors can offer healthy returns at a lower risk, partly because the negative performance of some constituents can be offset by the positive contribution of the best performers. One way in which investors generally try to outperform financial markets is to invest higher portions of their investable funds in countries whose economies are expected to outpace the average global growth whilst reducing exposures in countries which are expected to face weaker economic cycles. Whilst this is a very pragmatic approach, it is worth noting that identifying and investing in the right sector can also generate a strong investment return compared to country selection.
As different countries and regions are exposed to different economic conditions, open markets and globalisation allow companies in the same sector to generally be impacted by the same dynamics irrespective of the company’s own country of domicile. There are many determinants of stock performance that ultimately drive a sector to fare better compared to its peers. As a matter of fact, a change in the price of oil and fuels generally effects airlines across the globe, whilst lower level of interest rates have an impact on banks across different countries.
It is interesting to observe that, since the start of the year, corporate earnings and the eventful trade war disputes contributed to choppier markets over this year. President Trump’s plan to put investment restrictions on China was the main factor weighing on the performance of most sectors particularly in autos and semiconductor/equipment names. In this scenario, sectorial allocations have provided investors with greater benefits over geographic diversification strategies as developed country returns were more correlated.
Sectors like Technology and Consumer Discretionary contributed to significantly better performance on a year to date basis with returns of 16.70% and 15.60% respectively. This compares very well with a positive return close to 7% on the S&P 500 during the same period. On the contrary, underweighting sectors such as Telecoms and Consumer Staples would have benefited investment portfolios as these sectors generated negative returns of 4.3% and 6.5% respectively. This implies that selecting the right sectors and avoiding the worst performers would have yielded a return of 23.2% in US dollar terms.
Sector returns are also dependent on where we stand in the economic cycle and some sectors such as Industrials and Financials tend to yield better returns early in the economic cycle when economic growth is accelerating, other defensive sectors like Staples and Utilities tend to perform better when economic progression is weaker with flat or negative returns registered year to date.
The relative difference in performance is less manifested in the country returns where various stock markets in developed economies have moved in tandem providing for little returns gap when analysed and compared in their respective currencies. Whilst accurate country selection would have still yielded strong returns, the sectorial benefits have been somewhat diluted at country level. Indeed, the return gap between the best and the worst performing country index during 2018 was closer to 11%.
The emphasis to industry sectors does not necessarily mean lower volatility for investors. However, as global markets become more integrated, key sectors characteristics will have more bearings on share performance other than where that share is merely listed. As the developed stock markets in the world remain correlated, diversification and optimal returns are more likely to be achieved if evolving changes in sectors keep their pace. Allocating by sectors have proven to offer better correlation benefits as these groups were less dependent on one another over the year.
Share this item:
Sort reviews by:
Latest
Oldest
Add a review
This item has no reviews yet.
BOV Asset Management Guide has identified the following related material
Fees
More details
>
e-Statements Service
More details
>
Segwi | Tagħrif fuq l-Investiment Sostenibbli
More details
>
Upscaling the Multi-Manager concept through Multi-Strate...
More details
>
Sustainability Risk Policy
More details
>
Vilhena European Multi Manager
More details
>
Vilhena Malta Bond Fund Update
More details
>
Vilhena Malta Government Bond Fund update
More details
>
Funds Update
More details
>
Five suggestions to better protect Maltese investors fro...
More details
>
BOV... Your companion through life
More details
>
EFSI 2.0 – Can Malta leverage more funding?
More details
>
What we offer
More details
>
Investment Solutions
More details
>
Institutional Clients
More details
>
Paving the way to electronic payments
More details
>
European Money Week – Promoting Financial Literacy among...
More details
>
The young Investor
More details
>
Investor Sentiment Index
More details
>
AGM Updates for Shareholders
More details
>
next
Previous
Firefighting inflation
Firefighting inflation...
Change in Fee Structure ...
Change in Fee Structure BOV Portfolio Funds...
US equities poised for v...
US equities poised for volatility?...
Markets in 2022: The nex...
Markets in 2022: The next phase of the recovery...
Notice to change of regi...
Notice to change of registered address for Vilhena Funds SICAV plc ...
Multi-Asset Portfolios? ...
Multi-Asset Portfolios? A Unique Winning Strategy...
From hope to optimism
From hope to optimism...
BOV Balanced Portfolio F...
Portfolio Funds...
Vilhena Euro Income Fund...
Income Fund...
Vilhena Global Themed Fu...
Growth Funds...
Vilhena Maltese Opportun...
Growth Fund...
next
previous
Complaints Handing Polic...
Complaints Handing Policy...
Outsourcing risk- key co...
Outsourcing risk- key considerations...
Vilhena US Multi Manager...
Vilhena US Multi Manager Fund USD KIID...
BOV Investment Funds Int...
BOV Investment Funds Interim Report 2021...
ESG investing: at the fo...
ESG investing: at the forefront for new opportunities...
Earnings reach herd immu...
Earnings reach herd immunity...
The Equity Market Beyond...
The Equity Market Beyond the Pandemic Webinar...
BOV Conservative Portfol...
Portfolio Fund...
income on investment
Designed for those interested in a regular income...
Vilhena Far East Opportu...
Growth Fund...
next
previous
Notice to Suspension of ...
Notice to Suspension of Dealing Vilhena Global Themed Fund...
Vilhena US Multi Manager...
Growth Funds...
BOV Investment Funds Ann...
BOV Investment Funds Annual Report 2021...
Vilhena Interim Report 2...
Vilhena Interim Report 2021...
Segwi | Tagħrif fuq l-In...
Segwi | Tagħrif fuq l-Investiment Sostenibbli...
Inflationary pressures o...
Inflationary pressures on fixed income markets...
BOV Fund Services may assist you in your passporting requirements. In fact, BOV Fund Servi...
BOV Investment Funds
Designed for those interested in investing in line with ones risk tolerance. ...
Market Reports
A daily overview on international markets...
Vilhena European Multi-M...
Growth Fund...
next
previous
Inflation and its impact...
Inflation and its impact on the local investor...
Vilhena US Multi Manager...
Vilhena US Multi Manager Fund Euro KIID...
Funds Outlook 2022 The N...
Funds Outlook 2022 The Next Phase of the Recovery...
Operational risk post-CO...
Operational risk post-COVID...
Liquidity – a greatly ov...
Liquidity – a greatly overlooked attribute...
Local equity market: Bey...
Local equity market: Beyond the unprecedented...
BOV Growth Portfolio Fun...
Portfolio Fund...
FUNDamentals Newsletter
Keep yourself informed...
Vilhena Broad Opportunit...
Absolute Return...
Vilhena Maltese Equity F...
Growth Fund...
next
previous
BOV Asset Management YouTube Channel
Calendar of Events
<<
29 June 22
>>
view all events
>
Quicklinks
Factsheets...
KIIDs...
Bloomberg...
Malta Stock Exchange...
FUNDamentals Newsletter...
EFAMA...
Finance Malta...
MFIA...
MFSA...
Daily Share Prices...
next
previous
News Feed
Firefighting inflation
Firefighting inflation...
read more
>
Notice to Suspension of Dealing Vilhena Global The...
Notice to Suspension of Dealing Vilhena Global Themed Fund...
read more
>
Change in Fee Structure BOV Portfolio Funds
Change in Fee Structure BOV Portfolio Funds...
read more
>
Inflation and its impact on the local investor
Inflation and its impact on the local investor...
read more
>
Outsourcing risk- key considerations
Outsourcing risk- key considerations...
read more
>
US equities poised for volatility?
US equities poised for volatility?...
read more
>
Funds Outlook 2022 The Next Phase of the Recovery
Funds Outlook 2022 The Next Phase of the Recovery...
read more
>
Markets in 2022: The next phase of the recovery
Markets in 2022: The next phase of the recovery...
read more
>
Operational risk post-COVID
Operational risk post-COVID...
read more
>
Notice to change of registered address for Vilhena...
Notice to change of registered address for Vilhena Funds SICAV plc ...
read more
>
ESG investing: at the forefront for new opportunit...
ESG investing: at the forefront for new opportunities...
read more
>
next
Previous