Tracking global equity alpha
What were the keys to outperformance for global equity investors in 2012? On the positive side of the ledger, the answer is simple: Financials. The sector returned 29% in USD terms, versus 17% for global equities as a whole. Financials’ dominance was a global phenomenon: the sector outperformed local benchmarks in every major region (including Global Emerging Markets), and virtually every major country (they underperformed in Korea). They were the single best performing sector in the US (by 12%), the UK (by 27%), and Japan (by 27%). All told, Financials contributed nearly 1/3rd of global equity market returns in 2012, with only 1/5th of the global market cap; the flip side of their dominance was that 7 of the other 9 global sectors underperformed.
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UBS Investment Bank