Defensive sectors often trade at premium valuations relative to the broader market and that is certainly the case at the moment with the consumer staples and utilities groups.
However, that does not mean investors should flee richly valued groups such as consumer staples and utilities. In fact, the case for these higher-yielding sectors could be getting a boost as bond markets are pricing in diminishing chances of the Federal Reserve boosting interest rates later this year.
“In an examination of equal-weighting versus capitalization-weighting in the consumer staples sector, we have confirmation that equal-weighting has outperformed through a business cycle,” adds Seeking Alpha.
For more information on the consumer staples sector, visit our consumer staples category.
Guggenheim S&P Equal Weight Consumer Staples ETF
Tom Lydon’s clients own shares of RSP.