Capital Markets: Observations & Insights

Not All Sectors Are Expensive ​ Valuation

• Growth-oriented sectors are attractively valued compared to history, particularly given low levels of interest rates, in contrast to many other sectors

P/E Relative to 20-Year Median

18%

12%

Attractively valued

12%

6%

4%

3%

2%

-3%

-7%

Utilities

Materials

Financials

Industrials

Technology

Health Care

Real Estate

Cons. Staples

Cons. Discretionary

Source: FactSet, based on S&P 500 Index, 3/31/18. Note: energy and telecom are excluded; the former because of an extremely high P/E due to depressed earnings and the latter owing to a small number of constituents. Real estate is a new sector classification, so for the historical data shown above, the industry group category that has nearly17 years of data was utilized.

Page 24