Last week saw some real doom and gloom coming from the mouths of CEOs, one of whom famously shared that he has a “super bad” feeling about the economy, Kristina Hooper, chief global market strategist at Invesco, wrote in a recent insight.
“So is the global economy super bad? In my opinion, definitely not. I think it’s more appropriate to describe it as ‘super strange’ – I continuously hear financial professionals and clients tell me that they are not sure what to make of it, that it is such an unusual environment,” Hooper said.
While some parts of the global economy are in poor shape, other parts are not. Some companies are benefiting from this environment, while others aren’t. Hooper said that despite very pessimistic views from some CEOs, there have also been more positive observations and views.
“Last week Hewlett Packard reported better-than-expected earnings and revised its guidance upward for the rest of the year. Delta Airlines CEO Ed Bastian said ‘the demand is off the charts.’ This is something we have heard from other airlines as well; and while they are forecasting higher energy costs, they appear to be able to manage them well. And original equipment manufacturer Foxconn anticipated an improved supply chain environment in 0the back half of 2022,” Hooper wrote.
Removing size bias from your portfolio can help diversify your exposure and capitalize on opportunities and tailwinds happening outside of the biggest players in an index.
An equal-weight strategy, such as the Invesco S&P 500® Equal Weight ETF (RSP) or the Invesco ESG S&P 500 Equal Weight ETF (RSPE), can provide diversification benefits and reduce concentration risk by weighting each constituent company equally so that a small group of companies does not have an outsized impact on the index.
RSP and RSPE have historically demonstrated strong returns and a tilt toward smaller, value companies, making both offerings uniquely attractive in the current environment.
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