Insights

CHARTS  |  MAY 2018
Which sectors do well during bear markets?
Our chart shows that, during the last seven market corrections, higher-yielding sectors have been more resilient than lower-yielding ones.

Market volatility was near record lows in 2017, but uncertainty has returned this year. Trying to time markets by indiscriminately selling equities is rarely a winning strategy, but portfolio protection with income-producing assets could be. Historically, dividend payers have tended to outpace low-yielding companies during market downturns, since dividends are seen as a steadier and more predictable source of returns than price appreciation. In fact, returns from the four highest-yielding sectors tended to beat the market during the last seven S&P 500 corrections of 15% or more (based in USD). Traditionally volatile sectors such as consumer discretionary and technology should not be ignored though, as they include market leaders that have exhibited strong earnings power. Investors may want to consider exposure to both growth and dividend-oriented securities to create a well-rounded portfolio.

Want details on how sectors have performed when markets are volatile? See The Long View for more.