Some Methodological Changes. Our earnings momentum metric has been refined. In addition, we have also introduced a methodology for weighting ESG factors in sectors and regions. These modifications have resulted in an unusually large number of changes in recommendations.
Sector Strategy. With earnings having a heavier weight (65%) in our sector model than valuation (35%), every change in sector recommendation (Figure 1) involved an earnings factor.
Regional Strategy. Earnings and valuation are equal-weighted in our regional model; half the changes in regional recommendations (Figure 2) involved valuation.
Figure 1: Key Sector Recommendations Figure 2: Key Regional Recommendations
Arrows Indicate Change vs. Last Month Arrows Indicate Change vs. Last Month
Source: Cornerstone Capital Group
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Michael Geraghty is the Global Markets Strategist for Cornerstone Capital Group. He has over three decades of experience in the financial services industry including working as an investment strategist at UBS and Citi.