The S&P 500 High beta outperformed the S&P 500 Index on a relative basis again on Wednesday, off to a hot start this year after a dismal showing in 2022.
The S&P 500 suffered its biggest drop in over a month on Wednesday, declining 1.6%. All large-cap segments fell, with the consumer staples sector being the worst hit, down 2.7%, while communication services managed to limit its losses to 0.9%, according to the S&P Dow Jones Indices daily dashboard.
Meanwhile, high beta outperformed the S&P 500 on Wednesday, declining just 1.2% during the day. Month to date, high beta is the top-performing U.S. equity factor, up 9.3%, while the S&P 500 is up 2.4%. Investors can add high beta exposure with the Invesco S&P 500 High Beta ETF (SPHB), which tracks the S&P 500 High Beta Index.
High beta’s outperformance is a sharp pivot from its 2022 showing. The S&P 500 High Beta Index was the worst-performing factor in December, declining 8.5%, and the third worst-performing factor in 2022, dropping 20.3%. The parent index S&P 500 declined 18.1% during the same period.
High beta’s sector tilts have led to its month-to-date outperformance. Compared to the S&P 500, high beta is significantly underweight to healthcare, the worst-performing sector year-to-date, while overweight to the third-best performer, consumer discretionary, according to the S&P 500 Factor Dashboard.
Holdings in SPHB include Etsy Inc (ETSY), NVIDIA Corporation (NVDA), Carnival Corporation (CCL), Advanced Micro Devices Inc (AMD), and Caesars Entertainment Inc (CZR), according to ETF Database.
As of January 18, SPHB has seen $740 million in outflows over one year, as investors rotated into value-oriented strategies, such as the Invesco S&P 500 Low Volatility ETF (SPLV), in 2022. SPHB and SPLV each charge 25 basis points.
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