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Which ASX 200 sector has rebounded the strongest in this new bull market?

The ASX has rebounded strongly over the past few weeks, with the All Ordinaries (ASX: XAO) rising just over 26% and the S&P/ASX 200 Index (ASX: XJO) up around 21% since hitting a low on 23 March 2020.

However, the ASX 200 can be divided further into sectors. There are sector indices that allow investors to benchmark and track the performance of a particular market sector or industry.

The Global Industry Classification Standard (GICS) has been developed and consists of the following 11 unique sectors for the ASX:

  • Consumer Discretionary
  • Consumer Staples
  • Energy
  • Financials
  • Health Care
  • Industrials
  • Information Technology (IT)
  • Materials
  • Real Estate
  • Communication Services
  • Utilities

Which ASX sector has performed best in the recent bull market?

While I’m not going to run through the returns of each sector, I will point out the best and worst performers below. 

The best performers

As of yesterday’s close, the top 3 returning sectors on the ASX since 23 March 2020 are the IT, Energy and Consumer Discretionary sectors, with returns of 42%, 33% and 28% respectively.

What is interesting to note, however, is these 3 sectors were also the worst performing from the beginning of the year until the market’s bottom on 23 March. This shows that high volatility moves in both directions, with these sectors being heavily sold off before rebounding the strongest.

Some of the ASX shares to rebound strongly in these sectors have been Crown Resorts Ltd (ASX: CWN), Santos Ltd (ASX: STO) and Corporate Travel Management Ltd (ASX: CTD).

The worst performers

All 11 sectors have made positive returns during this bull market. However, the 3 lowest returning sectors have been Consumer Staples, Communication Services and the Utilities sectors, posting returns of 7%, 9% and 15% respectively.

Similarly to the best-performing sectors holding up poorly during the bear market, the above worst performers were among the top-performing sectors during the market crash. This goes to show where investors believe safety can be found on the ASX during a market drop, with consumer staples, communication services and utilities all being essential services.

As a result, investors moved into ASX shares such as Woolworths Group Ltd  (ASX: WOW) and Telstra Corporation Ltd (ASX: TLS) for lower market volatility and to lower their portfolio’s risk.

Gold

In addition to these sectors, the S&P Dow Jones Indices also recognises a number of other industry segments which are relevant to the ASX. These include the All Ordinaries Gold Index.

Gold can be seen as a store of value, with the yellow metal usually seeing an increase in demand during times of economic uncertainty. The recent market conditions caused by the COVID-19 pandemic have proved to be no different. The All Ordinaries Gold Index is currently up 30% from a low on 23 March. And it’s one of the few sectors which has provided positive returns year-to-date, increasing 6% since the start of the year. 

Foolish takeaway

Looking at the returns from individual sectors on the ASX can show some interesting dynamics. The sectors falling the furthest during the market crash have been the ones rising the strongest during this new bull market. And visa versa. 

Knowing this information may help you to better understand the risks of the sectors in your portfolio. Additionally, if you have a view on where you think the market might be heading, it may help point you towards particular sectors worthy of further investigation.

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Motley Fool contributor Michael Tonon owns shares of Corporate Travel Management Limited. The Motley Fool Australia owns shares of and has recommended Corporate Travel Management Limited, Crown Resorts Limited, and Telstra Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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