With increasing inflation and bond yields, Financials have gained relative strength. Therefore, our sector view has slightly altered and we now favour Energy, Financials, Comms Services, and select plays in Consumer Discretionary and Technology.
This week we introduce a new method where we move away from sectors and instead assess performance and momentum of major societal trends that we match small-cap stocks against.
Our preferred sectors are still within the cyclicals space, where there is an increasing overlap between value and momentum stocks. Technology in the rebounded somewhat but volatility will remain as we are in a tug-of-war between inflation and innovation.
