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Dramatic reshuffle for S&P Low Volatility Index

The S&P 500 Low Volatility Index, consisting of the 100 least volatile stocks in the index, was rebalanced last week. The outcome? No less than two thirds of the index has changed. Healthcare is now the largest single sector in the index.

While the annual rebalancing of the S&P 500 index yielded virtually no changes in its composition, that’s very different for the S&P 500 Low Volatility Index - which is rebalanced on a quarterly basis.

‘Short but fierce value rally ahead’

The difference in valuations between expensive and cheap stocks has overshot in recent weeks. Investors can therefore expect a period of outperformance of value stocks. However, this will not last too long. 

Investors’ asset allocation consensus now seems stronger than it has ever been. Pretty much all investors are overweight in quality and growth stocks, avoiding the sectors most affected by the corona crisis.

Liquidity holds up in Luxembourg funds

Liquidity in Luxembourg’s funds is a key concern for the CSSF, Luxembourg’s financial regulator. With all asset class crashing over the last month, investors have had no easy safe-haven options, and many have sought to sell up and hold cash. However, to date, this stress appears not to have led to the suspension of any Lux fund.