The Only Factor That Mattered in Q2

 

In Q2, high beta stocks in the US skyrocketed, with the top quintile gaining 33%, while low beta names actually declined by -2.6%. Our analysis of a US equity universe (Russell 3000 proxy) going back to 1986 shows this 35 percentage point spread was the most dramatic in history.

The driver? A fierce reversal in risk appetite following the tariff pause in early April.

This theme was consistent across market caps. In US small cap, the top quintile beta stocks outperformed by 28 percentage points – the most since the dot-com bubble.