- Following last year’s plunge across markets, technology and growth stocks are back on top
- Aside from a brief wobble in February, year-to-date growth has crushed every other investment style
Following the YTD strength in equity markets, Russ Koesterich discusses how a combination of cyclical, and a growth bias may serve investors well in today’s market.
Following last year’s plunge across markets, technology, and growth stocks are back on top. Aside from a brief wobble in February, year-to-date growth has crushed every other investment style. But while growth continues to advance, since early June there has been a subtle shift in market leadership. Tech is now narrowly underperforming with the top performing sectors being mostly cyclical.
The shift in leadership has occurred against a backdrop of both higher interest rates and an improving economic outlook. In this environment, investors are increasingly favoring cyclical expressions, i.e., companies that stand to benefit from economic resilience. My take is to combine the two themes – cyclical and a growth bias – and maintain a tilt towards reasonably valued growth names, otherwise known as GARP.
Back In early February, I suggested a tilt towards GARP. Despite growth dominating equity performance in the spring, cyclical and GARP have been outperforming since early June. Not only has it beaten growth, but also the broader market and other investment styles, notably value and momentum.