Investors Shifted To Value Investments in February: S&P

“In February, investors pulled back from the more aggressive styles that dominated returns over the past year and into January,” says Rosanne Pane, Standard & Poor’s mutual fund strategist. “Investors are now focusing on consistent earnings at attractive prices.”

February was marked by a rotation of investments into deeper cyclical issues, particularly materials and energy, as well as consumer staples, says Sam Stovall, S&P’s chief investment strategist. He notes that investors are probably looking to energy and materials as a hedge against inflation, while the interest in consumer staples may show concern about a possible interest rate hike.

Investors are continuing to favor smaller-cap issues, which S&P notes is unusual for the second year of a bull market. Small-cap funds lead so far this year, although mid-cap funds led in February. Investors may be shifting to less aggressive value issues, but they’re still looking for growth, S&P concludes.