Capital Ideas

Investment insights from Capital Group

U.S. Equities
Which sectors do well during bear markets?

Higher yielding stocks have typically been more resilient during market corrections.


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. 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.

Past results are not predictive of results in future periods.


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