Taken together, the U.K.’s vote to leave the European Union and the U.S. presidential election contributed to a shift in the underlying fabric of equity markets starting in the second half of the year.

While the Brexit vote created huge uncertainty in global markets, the U.S. election and an upbeat assessment by the Fed had an opposite effect: Institutional investors shifted their strategies toward U.S. companies that benefit from economic growth and away from minimizing risk, notes Raman Aylur Subramanian, MSCI’s head of equity applied research, in his latest post.

The result: We saw a rotation to cyclical sectors and factors out of their defensive counterparts as well as a move to small-cap stocks and away from large caps.

For the analysis, click here.


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