Utilities tops MSCI’s sector indices during May

Jun 6th, 2017 | By | Category: Equities

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Leading index provider to the exchange-traded fund industry MSCI has released its performance report for May 2017, breaking down the best and worst performing equity indices over this period by country, factor and sector.

Utilities tops MSCI’s sector indices during May

MSCI’s Utilities Index returned 5.6% during May.

MSCI reports the highest index returns in May were achieved by Korea, for country exposure; momentum, for factor exposure; and utilities, for sector exposure.

Single Country Index Rankings

The best performing country during May was Korea (8.1%) and the worst was Australia (-3.9%), while the broad market average, represented by the return on the MSCI All Country World Index (ACWI), was 2.3%. Switzerland (5.6%), France (5.4%), China (5.3%), Germany (4.8%), the UK (4.6%) and Japan (3.0%) also managed to outperform the ACWI over this period.

Using the forward Price-to-Earnings ratio, the most expensive country is the USA with a forward P/E of 17.9 and the cheapest, Korea with a forward P/E of 9.3, while the market (ACWI) forward P/E is 16.0.

China (12.7), Germany (13.8), Japan (14.1), the UK (14.7), France (15.1), Canada (15.1) and Australia (15.3) are also trading at forward P/E ratios below the market average.

The country with the largest year-to-date (YTD) index growth is Korea (27.6%). China (22.1%), France (19.3%), Switzerland (19.3%), Germany (17.2%) and the UK (12.2%) have also outperformed the ACWI’s YTD return of 11.3%.

Factor Index Rankings

The best performing factor during May was momentum (4.1%) and the worst was enhanced value (1.4%), while the market ACWI returned 2.3%.

Quality (3.3%), minimum volatility (2.9%), high dividend yield (2.7%), factor mix A series (2.7%), risk-weighted (2.6%) and equal weighted (2.5%) also outperformed the broad market ACWI over this period.

Using the forward P/E, the most expensive factor is minimum volatility USD with a forward P/E of 19.0 and the cheapest, enhanced value with a forward P/E of 9.8, while the market (ACWI) forward P/E is 16.0.

High dividend yield (14.2), equal-weighted (15.2) and risk-weighted (16.0) strategies are also trading at forward P/E ratios below the market average ACWI forward P/E of 16.0.

The factor with the strongest YTD index growth is momentum (16.0%). Quality (14.9%), equal-weighted (13.0%), risk-weighted (12.4%) and factor mix A series (11.5%) have also outperformed the ACWI’s 11.3% YTD return.

Sector Index Rankings

The best performing sector during May was utilities (5.6%) and the worst was energy (-1.5%), while the market ACWI returned 2.3%.

Information technology (4.9%), consumer staples (4.7%), and telecomm services (3.4%) also outperformed the ACWI over this period.

Using the forward P/E, the most expensive sector is real estate with a forward P/E of 22.0 and the cheapest, financials with a forward P/E of 11.8, while the market (ACWI) forward P/E is 16.0.

Materials (14.7), telecomm services (14.9) and utilities (15.9) are also trading at a forward P/E ratio below the market average ACWI forward P/E of 16.0.

The sector with the strongest YTD return is information technology with a 21.9% gain. Consumer staples (14.3%), utilities (13.6%), consumer discretionary (13.4%), healthcare (13.1%) and industrials (12.6%) have also outperformed the ACWI’s 11.3% YTD return.

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