Sector exposure historically has been a major driver of stock returns and
can be an effective way to seek an objective and manage portfolio risk
Denise Chisholm l Sector Strategist
Scott O’Reilly, CFA l Head of Index, Sector, International, and Factor Products
Key Takeaways
• Using a sector-based framework to build
equity portfolios can help investors achieve a
variety of investment objectives and greater
control in managing portfolio risk.
• Beyond company-specific factors, sector
exposure has been the most influential driver
of the variability in equity market returns over
time, yet sector-based portfolio construction
remains an underutilized strategy in the
marketplace.
• Equity sectors have a variety of attributes,
including stable classification, consistent
earnings drivers, high return dispersion, clear
volatility patterns, and low correlations, which
together can help investors generate an
efficient portfolio.
Read the complete case study right here: https://www.etf.com/docs/The_Case_Sector_Based_Framework.pdf