INCORPORATING QUANT SIGNALS INTO EU EQUITY SECTOR/STYLE STRATEGY: MAINTAIN A TILT TO CYCLICALS AND VALUE

Highlights:

  • We present an update of our proprietary equity valuation tool, based on quant models. It provides indications of over- or undervaluation for different sectors and styles of European equities, which is further enriched by our qualitative analysis. 
  • Currently, among European equity sectors, financials, energy, telecoms, and autos look undervalued while Pharma, utilities and software appear overvalued.
  • Among European equity styles, undervaluation is indicated for large cap value and small cap while growth, quality, and momentum look particularly expensive.
  • That said, incorporating also non-quant signals coming from our qualitative analyses, we recommend having a tilt to cyclicals and value: Overweight insurance, diversified financials, capital goods, semiconductors, tech hardware and food. Underweight transportation, media and telecoms.

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INCORPORATING QUANT SIGNALS INTO EU EQUITY SECTOR/STYLE STRATEGY: MAINTAIN A TILT TO CYCLICALS AND VALUE

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