The attempted rotation away from the winning US/tech/growth themes of recent years for the benefit of ‘long-unloved’ value and non-US regions remains to be seen as BetaShares believes that lift in oil prices and bond yields would still favour value sectors such as energy and financials.
On top of that, the technology would be also expected to retain strong structural tailwinds and offer still-reasonable overall valuations, given promised solid earnings growth, the firm’s chief economist, David Bassanese, said in a note.
He stressed that over the last three months of 2020, Japan and emerging markets performed best among regions, while financials and energy shone among global sectors, with small caps and value faring best among factors.
“Japan and EM continued to do well in December, though technology performed strongly among sectors while value slipped back among factors,” he said.
“On a currency-hedged basis, relative Australian performance has been mixed, though much stronger than unhedged global equities due to strength in the $A.
“Overall, I remain dubious whether we’re really seeing a sustained rotation, or merely an unwind of the premium growth sectors attracted in the early dark days of the COVID sell-off.”
As far as Australian thematic BetaShares’ exchange-traded funds (ETFs) were concerned, technology (ATEC) and small caps (SMLL) bounced back solidly last month after missing November’s market gains, while resources (QRE) had another strong month, reflecting continued strength in iron-ore prices.
“These remain the top three relative performers,” Bassanese said.
Among the global currency-hedged funds, the tech heavy NASDAQ-100 (HNDQ) and gold miners sector (MNRS) bounced back last month, the latter helped by a rebound in gold prices which in turn likely reflected further US dollar weakness, he said.
Following this, Quality’s (HQLT) relative performance levelled out in recent months, though along with food producers (FOOD) and HNDQ it remains among the top three relative performers.
At the same time, energy producers (FUEL) and banks (BNKS) enjoyed a strong last quarter, which so far, however, had only partly made up for quite weak relative performance earlier in the year.
