Fearing stock market rout, investors seek shelter in dependable dividends

LONDON - Defensive equity strategies focused on high payouts and steady earnings have gained in popularity this year as investors flock to safety, worried the biggest stock market rally in decades is about to come crashing down.

The inflows accelerated at the start of May, when hopes of a truce in a trade war between the U.S. and China were dashed.Unusually, focusing on the parts of the stock market considered safer not only protected investors from the worst of the sell-off late last year, but also helped them outperform during the first-quarter rally of 2019.

The S&P 500 is up a whopping 16.7% this year, soaring to a record high last week, but an index tracking just the “low volatility” stocks in the S&P 500 is beating that, up 17.4% year-to-date. Low volatility also outperformed in 2018. The respondents also said they increased their cash buffers to 5.6% from 4.6% as they ramped up protections against a market slide.

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