Keep in mind, these results go back to November of 2009. And the prevailing wisdom is that -- in spite of bearish corrections in 2010 and 2011 -- risk assets have trended higher. Typically, this would mean that the riskier, the more the reward.
However, in the "uptrend" the best returns have come from assets that do not lose as much in the one-day collapses or the bearish corrections. Diversified high-yield bond ETFs like PHB have seen less downside pain than the S&P 500 on these occasions, but have outperformed on the upside.
The same can be said for higher-yielding ETFs (e.g., Pipeline Partnerships ETFs, Dividend ETFs, etc.) as well as non-cyclicals (e.g., Pharma ETFs, Staples ETFs, Utilities ETFs.). Each and every one has out-hustled the broader domestic and broader world benchmarks.
Some may erroneously conclude that it is merely a case of defensive equity positioning. In truth, it has a lot to do with cash flow and mathematics. Nearly all of the "lose less" performers generate greater cash flow than the S&P 500, and that cash flow accumulates over several years.In addition, when the broader benchmarks have had a bear of time recovering from -17%, -18%, -19% declines in 2010 and in 2011, the "lose less" crowd typically needed to make up half the ground. The less territory an asset needs to retrace, the more new territory it can claim.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV