Tilting toward Growth over Value
One of the themes in our sector/style work recently has been to tilt somewhat more toward Growth over Value and Cyclical areas within the US market.
Why? Three key factors support Growth over Value, while one remains a concern.
Our bottom-up aggregated earnings estimate revisions trends continue to favor Growth
The relative performance trend has been shifting back to Growth over Value
However . . . relative valuation of Growth versus Value remains stretched versus historical norms, though the interest rate backdrop is arguably a structural reason for that
Also, the relative risk (volatility) differential of Growth vs Value has moved back in favor of Growth (i.e., Growth is now less volatile than Value on a rolling six-month basis).