Best and worst performing UK FTSE All-Share sectors in 2020


What a year 2020 was for investing. 

Record-breaking lows, recoveries, logic, panic and confusion all thrown together with fortunes made and lost. A pandemic, Brexit and a sometimes chaotic US Election made for a perfect storm in instability.

But now the dust is settling which sectors fared best and worst and more importantly why? 

Let's look at the UK in this article.

Data from IG from H1 2021 (Jan-July) shows the disparity between sectors in the FTSE All-Share:

Sector                             Average share price return

Healthcare                     +5.1%

Materials                             -1.8%

Information technology     -2.1%

Utilities                             -6.5%

Consumer staples             -8.2%

Financials                     -19.0%

Industrials                     -24.5%

Real estate                     -27.4%

Consumer discretionary     -30.3%

Communication services    -34.2%

Energy                             -45.7%

With the benefit of hindsight, the disparities at the extremes are logical, but were hard to predict in terms of timings given some dramatic trading days where it was all too easy to be too late to react to what was happening.

Healthcare plays a huge role in both managing and escaping from the pandemic and to such an extent that you might have expected to see even better returns, but there remain good growth and revenue prospects for many of the individual companies within the sectors.

And at the other extreme, energy usage (Utilities are not included in this sector) slumped with consumers staying at home and travelling less. 

The likes of banks in particular took at hit in the Financials sectors with the slowdown in the economy and increase risk of defaults. And while we are by no means out of the woods, the banks have steady potential growth prospects when taking a longer term view.

And Real estate fared even worse with empty offices and carnage on the high street as shops big and small went under and into administration, with the damage likely to remain hard to recover from in the short to medium term.

With markets frequently forward looking much of the potential recovery has already been baked into the market with steep rises when the vaccines were announced even if the economy still had to suffer ongoing shocks from additional waves of the virus.

For those looking to invest (do your own research as ever), our picks would remain Healthcare and Financials going forward into 2021 and beyond, but the markets are likely to remain bumpy for some time and investing will not be for the faint-hearted.

Comments

Post a Comment

Popular posts from this blog

Explaining Gilt-edged securities (shortened to gilts)

Gilt-edged securities, also known as gilts, are debt securities issued by the government of the United Kingdom.   They are called gilt-edged securities because they are considered to be among the highest quality and most secure investments available, with a long history of low default rates and stable returns. Gilts are issued in a range of maturities, from short-term bills with a maturity of less than one year, to long-term bonds with a maturity of over 25 years. They pay a fixed rate of interest, known as the coupon, which is paid to investors on a regular basis, typically semi-annually. The principal amount of the gilt is repaid to the investor at the end of the term of the gilt. Gilts are issued by the UK Debt Management Office (DMO), which is an agency of the UK government responsible for managing the government's debt. The DMO issues gilts on behalf of the government to finance its borrowing requirements, and sets the terms and conditions of the gilts, including the coupon ra
Read more

What is Financial Intermediation Services Indirectly Measured (FISIM)?

Financial intermediation services indirectly measured, or FISIM, refers to the value of the services provided by financial intermediaries, such as banks and other financial institutions, in facilitating transactions between borrowers and lenders.  FISIM is typically calculated as the difference between the interest rates paid by borrowers and the interest rates received by lenders, minus the costs incurred by the financial intermediaries in providing these services. FISIM is an important concept in national accounts and macroeconomic analysis, as it helps to capture the economic value of the services provided by the financial sector. It is typically included in the measurement of gross domestic product (GDP) and other macroeconomic indicators, as it reflects the contribution of the financial sector to economic activity. There are several ways in which financial intermediaries provide value to the economy through their intermediation services. These include: Information gathering and pr
Read more

The European System of Accounts (ESA) explained

The European System of Accounts (ESA) is a set of rules and guidelines for the compilation of national accounts data in the European Union (EU). National accounts data is a set of statistical indicators that measure the economic activity of a country, including gross domestic product (GDP), national income, and employment. The ESA is designed to ensure that national accounts data is compiled in a consistent and comparable manner across the EU, so that it can be used to compare economic performance between different countries. The ESA is updated periodically to reflect changes in economic circumstances and to ensure that it remains relevant and useful. The ESA consists of a set of principles and guidelines that outline how national accounts data should be compiled, including definitions of key concepts, classification systems, and methods for estimating and measuring economic activity. The ESA also includes a set of sector accounts, which provide a detailed breakdown of economic activit
Read more