Where is the Money Flowing?

Research Notes March 2026 > https://www.unum.capital/post/rmar2026

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Running Our 45 Stock and ETF Screens Through Gemini (Google’s Artificial Intelligence Tool), These Are The Results:

We have officially moved from a standard defensive posture into what can only be described as a Geopolitical Barbell Strategy: Militarized Hard Assets & Digital Fortresses.

While the massive baseline of Aggressive Capital Preservation (Energy, MLPs, Utilities, Downside Hedged ETFs) remains completely intact, the growth side of the barbell has become highly weaponized. Professional capital is buying the physical constraints of a fractured world (Oil, Gas, Pipelines, Aerospace/Defense) while aggressively buying the software required to operate and defend it (Cloud Computing, Cybersecurity, Israel Tech). The persistent, parallel presence of PHDG (Downside Hedged) and ACWV (Global Min Volatility) running right alongside Cloud Computing (CLOU), Cyber (HACK), and Oil (XOP) proves investors are fully deployed but deeply paranoid. They are paying a premium to hedge the very rally they are buying.

Size Factors 📏

Small Cap 🐜: Strictly Thematic. Broad small-cap beta is dead. Capital is only stepping down the market-cap ladder for hyper-specific geopolitical themes: Israel Tech (IZRL), niche Cybersecurity (HACK, IHAK), or Small Cap Energy (PSCE).

Mid Cap ⚖: The Digital/Cyber Sweet Spot. Mid-caps are catching heavy bids solely through the lens of Tech Services (WIX, GWRE, TWLO) and Cloud/Cyber ETFs. Investors want software companies large enough to be profitable, but small enough to be acquired or scale rapidly.

Large Cap 🐳: Hedged and Equal-Weighted. Traditional cap-weighted S&P 500 exposure is being actively managed out. The screens are dominated by Equal Weight Energy (RSPG), Equal Weight Utilities (RSPU), and S&P 500 Downside Hedged (PHDG).

Style Factors 🎨

Value 🏷️: Physical Dominance. Deep value in physical reality—E&P (XOP, IEO) and Utilities (XLU, IDU)—remains the anchor. The market is capturing double-digit cash flow yields and ignoring speculative multiples.

Quality 💎: The Universal Filter. Whether buying Enterprise Software (IGV) or Oil Pipelines, the fundamental prerequisite is trailing free cash flow. Unprofitable tech remains entirely excluded.

Growth 🚀: The Digital Resurgence. Growth is officially back, but highly specialized. The violent reappearance of IGV (Software), CLOU (Cloud Computing), and Cybersecurity (IHAK) proves institutions are rotating into high-margin digital monopolies with captive audiences.

Momentum 🌊: The Ultimate Barbell. Trend strength is entirely bifurcated. The absolute strongest momentum lies simultaneously in Oil Refiners/Pipelines (CRAK, MLPX) and Cloud/Cyber Defense (IGV, SHLD).

Risk & Yield Factors ⚠️

Low Volatility & Hedging 🛡️: Paranoid Bullishness. The simultaneous highs in ACWV (Global Min Vol), USMV, and PHDG (Downside Hedged) next to breakout Tech/Energy ETFs is the defining tell. Institutions are actively buying portfolio insurance.

High Yield / Dividend 💰: Maximized. MLPs (MLPA, MLPX), Energy Income (EINC), and broad Super Dividends (DIV) continue to suck in capital acting as inflation-adjusted bond proxies.

Carry 🎒: Tax-Advantaged. The MLP space remains the ultimate carry trade, capturing physical pipeline tolls with favorable tax treatments.

Thematic & Sector Factors 🏗️

Defense (Kinetic & Cyber) 🏰: Surging. This is the loudest new signal. The screens are suddenly packed with Aerospace & Defense (PPA, XAR, ITA, SHLD) running alongside Cybersecurity (HACK, IHAK, FITE). Geopolitics is driving capital into both physical and digital weapons systems.

Cyclical 🔄: Energy Monopoly. Traditional cyclicals are completely boxed out by Energy. If it doesn't pull oil/gas out of the ground or move it through a pipe, cyclical money isn't interested.

Innovation 💡: Regional Specificity. Innovation is being bought via Israel Tech (IZRL, EIS), signaling a bet on highly specialized, defense-adjacent intellectual property.

Lester Davids

Senior Investment Analyst: Unum Capital