In recent months, two investment ideas have been rewarding investors with outperformance: companies in the defense sector, and those participating in share buybacks. Jeffrey Kleintop, Senior Vice President and Chief Global Investment Strategist at Charles Schwab, takes a close look at what may be driving both of these market themes and whether the outperformance is likely to continue. 

Defense has been a good offense for investors

“If geopolitical tensions ease, the outperformance by defense stocks may not be sustained. If they flare up, this investment theme may see volatility given a history of inconsistent performance.”

“The trend of rising outperformance by the shares of companies announcing buybacks has been remarkably stable in both the U.S. and European markets. History shows this theme could be sustained for years.”