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Quarter-End Insights

We See Value in Defense, Construction and Industrial Distributors

Housing market has been a bright spot during the pandemic.

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The Morningstar US Industrials Index has significantly underperformed the broader U.S. equity market over the trailing 12 months, falling 7.6% compared with the Morningstar US Market Index's 7.7% year-to-date gain. Most industries represented in the industrials index have underperformed year to date; however, aerospace and defense, construction and construction machinery, and airline stocks were hit particularly hard as investors worried about the coronavirus' long-term impact on air travel and the broader economy. However, as COVID-19 restrictions eased across the United States and signs of an economic recovery began to emerge, investor sentiment in the industrials sector greatly improved. The Morningstar US Industrials Index increased 18% quarter to date, trailing the broader U.S. equity market by 470 basis points.

Despite recent rally, industrials have underperformed year to date. - source: Morningstar

Brian Bernard does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

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