US large-cap equities rode on momentum as 2020 opened until the market peaked in mid-February, then saw US investors flock to defensive factors in recent weeks, according to new factor analysis from global index provider FTSE Russell.
FTSE Russell examined total returns for the US large-cap Russell 1000® Index through the lens of the six major market factors—Value, Quality, Size, Yield, Low Volatility and Momentum—for 2020 leading up to the market peak, and in the time period since the market peak. Factor analysis shows that Momentum led US. large caps at the start of 2020 up to mid-February while, in the period since mid-February, investors have gravitated most toward the defensive-oriented Quality and Low Volatility factors.
In addition, defensive-oriented stocks have cushioned the blow somewhat in the recent market selloff, with the Russell 1000 Defensive Index losing 19.9% since February 19 as compared to a 26.2% loss for the Russell 1000 Dynamic Index.
Catherine Yoshimoto – director of product management, FTSE Russell
“It has been a tale of two markets so far in 2020, with rising investor fears related to the global pandemic triggering a global selloff which began in mid-February. And while seemingly every global equity market and asset class has experienced negative returns in recent weeks, it can be instructive for investors to analyze different areas of the market that may provide relative stability in the current environment.”
FTSE Russell has established a special landing page—Coronavirus: mapping the impact—on our website that includes relevant content to help investors with information and insight to help navigate volatile markets during these challenging times.
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