More than a few have grumbled (including us) over the fact that the much thought of defensive sectors (health care, consumer staples and utilities) have been the leaders this year. And last week’s WSJ story, Investors Should Beware the Dark Side of Defensive Stocks suggested that “this may feel like a bull market, but the real winners have been bear-market darlings.”
But contrary to the current thinking it is not unusual for a defensive sector to be one of the three top performing sectors in an up market.
As shown at below, there have been 26 years since 1982 where the S&P 500 was positive. In twelve of those years, health care was one of the three best performing sectors, while consumer staples was in the top three ten times. Utilities have only been best six times, but it should not surprise anyone that in a low interest environment a sector with a 3.7% yield is one of the best performing.
