A new position in Drug Retail was added to the Select Industries Portfolio in April. The latest update to the Group Selection (GS) Score showed improvement in several factor categories which pushed the overall score back to Attractive.
Reinsurance has rated Attractive for a little over one year, but the latest round of GS Scores sent this group’s score skyrocketing, and it now ranks fourth highest among all 115 industry groups. Select Industries Portfolio overall insurance industry group exposure now 8.1%.
While Large/Mid Cap Biotechnology companies are boasting rising profitability, better cash flows, and stronger drug pipelines, the Small/Micro Cap Biotech firms, in general, have little tangible to show and valuations may be above the comfort zone.
Despite this sector’s extended outperformance, we think this trend may persist in the near term as Discretionary industry groups look increasingly attractive within our group work. Keeping an eye on the Fed Funds rate is key, however.
Our long term view towards China is positive (especially relative to other large EM countries), but short term, we see signs of the A-shares segment overheating and caution against near term corrections.
Performance of this thematic group has been strong but the domestic Big Four networks are facing increasing competition overseas. However, there is still a much better growth profile compared to many other industries.