Since global stock markets began their downward spiral in April, every sector has underperformed the FTSE All Share.


This depressing statistic can partly be explained by the fact that the All Share is a value weighted index and has therefore been disproportionately elevated by the relative outperformance of the largest companies on the market. The 10 biggest stocks in the UK account for 42% of the market capitalisation of the FTSE All Share and nine of them have enjoyed a share price increase in the last year. All but three of the FTSE 100 stocks that are in positive territory in the last year are from the top half of the market which accounts for 80% of the size of the FTSE All Share.

Taking the average performance of the FTSE All Share on an equal weighting, presents a less stark picture of the performance of the individual sectors.


The Energy and Utilities Sectors have held up especially well since the sell-off began, with Industrials and Financials (excluding collective investment vehicles) also managing a decent performance. By contrast, Basic Materials and Consumer Cyclicals have been especially poor performers.

The flight to safety

The strength in the energy sector is easily explained by price rises. Supply constraints alongside persistent demand has sent the price of oil and gas soaring and this has been reflected by these companies’ profits. The fact that many of these companies were trading on relatively lowly multiples until late last year has only added to their relative outperformance. While there is no doubt that continued pressure for more renewable alternatives to oil and gas will be applied to the big energy companies, demand is unlikely to dwindle any time soon.

Higher wholesale oil and gas prices should have been hurting the UK’s utilities companies, but the removal of the energy price cap has helped soften the blow and investors have leapt in. The sector’s defensive characteristics might be being questioned by the mainstream media (rising costs might leave many UK residents unable to pay their bills this winter), but in reality, the UK’s listed Utility companies are among the most reliable in a sell-off, helping to explain the sector’s relative outperformance in the year to date.

In a sell-off, investors tend to turn to defensive sectors, which are perceived to be relatively recession proof (healthcare, food…

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