Summary
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When the financial sector finally stabilizes – soon, it is hoped – we expect the vast amounts of liquidity (investment in money market funds as a share of total mutual fund assets is now at a 17-year high) to pour back into equities. Where will it go?
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In this research piece, we identify the sectors and industries that perform best in end-of-recession rallies this side of the border. For the purpose, we evaluated the performance of Canadian sectors and industries during the past five U.S. recessions.
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In Canada, there are four sectors that outperform the market in end-of-recession rallies: industrials, health care, financials and IT. Consumer discretionaries underperform but only by a slim margin. As is the case in the United States, resources usually lag the market during this period.
