Unless you’re convinced the economy is about to tank, trim these stocks, says world’s biggest asset manager

That seems to be the takeaway from the latest blog post from BlackRock BLK, -0.06% , which oversees more than $6.5 trillion in assets.

“When your teen starts to drive, you pay a higher insurance premium to guard against heightened risk,” he wrote. “In a slow growth, ‘tweet prone’ world, investors should expect to pay a premium for the safety of less cyclical names.” “As defensive stocks tend to be more sensitive to interest rates,” he said, “they have rallied as interest rates have plunged.”Utilities are trading at a 4% premium relative to the broader U.S. market while consumer staples are at a 7% premium — both above the post-crisis average.

“Should trade frictions escalate or some other exogenous shock knock the U.S. into a recession, both utilities and staples would likely outperform,” Koesterich said. “While defensive stocks play a role in a portfolio, absent the economy falling off a cliff, a little trimming may be in order.”

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Fonte: BusinessInsider - 🏆 729. / 51 Leggi di più »