10.06.201423:04:54UTC+00Surprise low beta shares enjoy biggest gains in US market

Various indexes tracking equities in the US markets have been experiencing record highs these past few months which usually lead to the assumption that stocks that move more with the market would post the greatest gains. This assumption proved itself true in 2013, but this year, shares of relatively less risk companies have outperformed expectations and are enjoying leading positions.

The S&P 500 index experienced last year a significant rally that caused it to climb 30% led by what are called high beta stocks. These are stocks whose value tend to cover more ground making them rise higher in an expanding market while running the risk of bigger losses in a losing market. Best Buy and Priceline were among 2013’s leaders in the S&P 500 since their profits are dependent on the health of the overall economy.

This time around, however, these high betas have found themselves in second place to low beta companies, those that traditionally avoid drastic movements, in sectors that posted the smallest gains in 2013, despite the S&P’s strong showing.

The 50 shares listed in the index with the lowest beta or risk scores have followed this reversal 

with an average gain of 12% compared to the 7% of the 50 shares with the highest beta scores.

Utilities, which are not known to be an exciting sector, are the current year’s best performers with a 14.5% climb in value, significantly above the S&P’s overall 6.4%. 

In terms of dividend yields, the same trend holds true as the 3.1% average yields of today’s leaders are almost double that of the high betas at 1.7%.

This drastic turnaround from the previous year when the top 50 high beta companies grew 51.4% on average, far greater than the 21.3% of the bottom 50 could signify that many investors are still opting to be on the cautionary side by picking those stocks which could cause smaller losses should the market fall.