Why global, why sector ?

According to a recent study from Goldman Sachs, industry performance across borders is becoming increasingly correlated. This increase is shown in the following graph:

Figure: Average Global Industry Correlation (rolling 3-year)

We believe that this trend, which began in 1998, will continue for many years. Cross-border investments, mergers, acquisitions, diminishing barriers to trade, greater portfolio diversification and seamless access to information around the globe are some of the reasons for a continued rise in sector correlation.

We allocate assets globally and by sector

This change in how markets behave has implications on how investment managers must look at markets. Sector allocation, as opposed to country or regional allocation, has become increasingly necessary in order to preserve consistency and balance across global industries.