Stocks that have underperformed in one year (‘laggards’) tend to outperform in the subsequent year.
Professional investors tend to sell low performing stocks towards the end of the calendar year to either save taxes and/or avoid having to report holding losing positions – a common practice called ‘window dressing’. Often, these ‘sold-down’ stocks go on to significantly outperform the broader market in the following year.
Additional value may be created by focusing on laggards where the technical picture implies that the correction is over and that their prices are likely to rise again.
Investors can gain exposure to this strategy in a single trade via the ‘JB Tracker Certificate on the US Laggards Basket 2019’. The basket is made up of 20 larger cap US equities from the S&P 500 index and is diversified across industries.
This product is issued by Bank Julius Baer & Co. Ltd., Zurich (Rating: Moody’s A2). Please note that the tracker certificate is not actively managed and that investors are exposed to the credit risk of the issuer. Julius Baer provides a secondary market, but investors should be aware of the bid/ask spread risk.
The final redemption date is 11 February 2020. For further information please refer to the Market Opportunity linked below or contact your Julius Baer representative.