A top-down look at the FTSE

How have the FTSE 100’s various sectors performed this year?

Source: Bloomberg

As the year winds down, it makes sense to take a brief look at the FTSE 100, how the various sectors have fared, and what their valuations look like.

Top of the gainers was the IT sector, up almost 29% for the year, while at the bottom came utilities, left out in the dash for high growth and momentum stocks, with a 17% drop. Overall, only two sectors suffered a fall, with most seeing very healthy returns.

A momentum trader would look to follow these returns by allocating more to IT, industrials, materials and financials. In a bull market, the common rule is to buy the strongest performing assets. Meanwhile, investors may look to reduce their allocations to utilities and healthcare, although the yields on offer in utilities will diminish the losses, and will likely mean that many investors hold on to these, with the added consolation that the utility sector remains cheap on valuation grounds, relative to the others.

Looking at these current price to earnings (P/E) ratios, the IT and financial sectors remain quite expensive. While momentum may carry prices higher, they could be vulnerable to losses if results fail to meet expectations. Consumer staples, materials, real estate and consumer discretionary shares look more fairly valued.

  Return (%) P/E
Information Technology 28.84 45.13
Industrials 17.72 19.94
Materials 16.99 20.89
Financials 12.12 41.78
Consumer Staples 10.65 23.11
Consumer Discretionary 7 19.14
Telecoms Services 5.37 17.16
Real Estate 4.92 20.19
Energy 3.89 27.85
Health Care -4.38 26.46
Utilities -17.39 14.05


The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication.

Find articles by analysts