Low ROE Stocks Outperformed High ROE Peers In April
April is over and May has just begun. As this first week begins, Credit Suisse has reviewed the month that was.
Even though U.S. markets appreciated through the month, the firm noted that the U.S. "lagged all other major regions in both small and large cap in April, while Emerging Markets led."
Mid-cap growth names, Credit Suisse added, outperformed all others.
Small- and Large-cap equities have the strongest correlations in Utilities, REITs, Banks and Pharma/Biotech, according to the bank. Herd behavior also prevailed, as "the 25 most crowded names in actively managed small, mid and large cap funds outperformed in April."
Large-cap stocks with low Free Cash Flow (FCF) outperformed those with high FCF in April; large-caps with low ROE outperformed those with high ROEs.
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