latest-news-headlines Market Intelligence /marketintelligence/en/news-insights/latest-news-headlines/owning-mega-stocks-was-the-best-defensive-trading-strategy-in-the-first-quarter-57923916 content
Log in to other products

Login to Market Intelligence Platform

 /


Looking for more?

Contact Us

Request a Demo

You're one step closer to unlocking our suite of comprehensive and robust tools.

Fill out the form so we can connect you to the right person.

If your company has a current subscription with S&P Global Market Intelligence, you can register as a new user for access to the platform(s) covered by your license at Market Intelligence platform or S&P Capital IQ.

  • First Name*
  • Last Name*
  • Business Email *
  • Phone *
  • Company Name *
  • City *
  • We generated a verification code for you

  • Enter verification Code here*

* Required

In This List

Owning mega stocks was the best defensive trading strategy in the first quarter

Brazil Pay TV Down Record Amount In 2019, With Losses Continuing In Q1'20

Case Study: Transforming Sales Enablement Data at a Global Advertising and Media Firm

Impact of COVID 19 on US Video Entertainment Trends

Paypal Well-Positioned To Gain Share In COVID-Related Digital Payments Shift


Owning mega stocks was the best defensive trading strategy in the first quarter

Amid the massive downturn in the S&P 500 in the first quarter of 2020, owning shares in the biggest U.S. companies was the best defensive play for downtrodden U.S. equities investors.

With the S&P 500 shedding 20% of its value in the first quarter, the S&P 500 Enhanced Value index — which tracks stocks with attractive valuations based on metrics such as the price-to-earnings ratio — returned a grizzly negative 38.6%, according to S&P Dow Jones Indices.

With a decline of 14.1%, the best-performing factor was the S&P 500 Momentum Index, a surprise considering the factor follows companies with consistency in their performance.

SNL Image

The relatively good performance of both Momentum and Growth, at negative 14.8% — unusual in a declining market — was in part "associated to the outperformance of the very largest companies," Timothy Edwards, senior director of index investment strategy at S&P Dow Jones Indices, said in an email.

The mega-cap stocks outperformed smaller companies in 2019, and investors have continued to favor the giants like Microsoft Corp., Amazon.com Inc. and Apple Inc. in the downturn.

The S&P 500 Value factor was also a surprisingly low performer considering its defensive nature of measuring the ratios of book value, earnings, and sales to price. The factor returned negative 25.9% in the quarter.

"Value is a bit more subtle but sectors played a major role. An overweight in financials and energy, and especially underweights in information technology and communication services, have proved painful this year," Edwards said.

The S&P 500 Equal Weighted index did similarly poorly, returning negative 27.1%, but Edwards suggested the factor, which applies a fixed weighting of 0.2% to each constituent of the S&P 500, could add value.

"While the past is, notoriously, a poor predictor of the future, for market participants looking for a recent underperformer that might benefit if history were to repeat itself, the S&P 500 equal weight could offer an attractive way to participate in U.S. equities through the upcoming months," Edwards said.

This article was published by S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.