It may be time for investors to consider buying up "cyclical" stocks - namely those seen as most sensitive to the economic cycle, such as miners - since many have fallen to levels where they now represent good value, UBS (Xetra: UB0BL6 - news) equity strategists write in a note.
The UBS team writes that as an investment style, focusing on "quality" stocks - often in "defensive" areas such as household goods and food due to their resilience to economic downturns - has recently produced better returns than purely focusing on "value".
Since the start of 2013, the STOXX Europe 600 Basic Resources Index, which houses many cyclical mining stocks, has fallen around 14 percent - underperforming a gain of some 8 percent on the STOXX Europe 600 Personal Goods and Household Products Index and a 13 percent rise on the STOXX Europe 600 Food and Beverages Index.
However, UBS says that the pendulum may be about to swing back to looking at "value" as an investment style.
"If Quality runs much further, it may be time to reconsider some left behind cyclical value. Quality has outperformed Value by 45 percent since the European debt crisis started," adds UBS.
Reuters messaging rm://sudip.kargupta.thomsonreuters.com@reuters.net
