Some questions have dominated our customers’ conversations in 2021:
- Will inflation be transient or persistent?
- How can changes in the tax code affect markets?
- When will the Fed shrink and shrink?
- What style of investment do you earn this year: growth or value?
And that final question is the focus of Weekly Wire. As we head into the last five months of 2021, the growth vs. value race is gearing up for a photographic finish. Think about it until July 30thth, the Russell 3000 growth index has increased by 15.4% in the previous year and the Russell 3000 value index has increased by 16.9%.
What makes the proximity of these return flows even more interesting is that in early May the value index exceeded the growth rate by almost 17%. At the time, many on Wall Street thought that the global recovery would last longer and that bond yields would continue to rise, both dynamics that favor economically sensitive value stocks. Then, as we progressed during the second quarter, growth stocks rose again as bonds got a supply and investors grew worried about the sustainability of the expansion, as the Delta variant of Covid- 19 was only added to these concerns late.
We continue to maintain a neutral position between growth and value in our discretionary portfolios, relying on portfolio managers for the actively managed strategies we use to navigate this dynamic style and find the most compelling stock-level opportunities. And, ultimately, those factors that have and will continue to influence the trajectory of growth and stocks of value – the pace and sustainability of the economic recovery, the persistence of the rise in inflation, the direction of bond yields – also they will strongly influence the direction of monetary resources. and fiscal policy until the end of the year.
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The views expressed are those of Brinker Capital and are not intended to be investment advice or recommendations. For informational purposes only. Brinker Capital Investments, LLC, registered investment advisor. 2178-BCI-8/3/2021
Tagged: Tim Holland, weekly cable, market outlook, growth stocks, stock stocks
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