Large cap equity allocations appear to be starting to show a switch from the long-time dominance of technology stocks into financials.
Data from S&P Down Jones Indices for November and December revealed large-cap financials had outperformed large-cap information technology stocks.
While financials have outperformed techs on a single month basis several times in the past four years, two consecutive months of outperformance is much rarer, and this marks only the seventh such switch since August 2013.
Financials take lead
S&P 500 Financials in November outperformed the S&P 500 Information Technology sector by 2.4%, and so far in December have outperformed by 2.5%.
"Information Technology and Financials matter so much since they are the two biggest sectors in the S&P 500 with respective weights of 24% and 14.8%," Jodie Gunzberg, managing director and head of US equities at S&P Dow Jones Indices wrote in her blog.
She added: "Historically, the sectors of information technology (tech) and financials have moved in cycles with tech mostly outperforming since 2008.
"In the past 10 years tech has outperformed annualised by 8.2% and the outperformance has been solid until last month. The levels hit their widest spread on 27 November, but the spread has started to narrow since then."
Indeed, the data showed that financials were outperforming across all cap sizes, but Gunzberg said positioning would be important moving forward.
"Overall, while positioning inside sectors can help in a potential turn of performance, sticking with large caps on a broader scale may be most beneficial since information technology has lost least on its way down and financials have gained most on the rise in the whole sector spectrum.