Since the beginning of this year, value stocks from traditional industries have been performing much better than growth stocks. MSCI All Country World Value index attributes a gain of 8.2%, while MSCI All Country World Growth index attributes a negligible gain of 0.5%.
In our investment portfolios, we significantly prefer value stocks, respectively mutual funds focused on value stocks, at the expense of growth stocks. The performance of our investment portfolios since the beginning of the year has therefore been strongly influenced to our satisfaction by the significantly better performance of value stocks.
The value sectors include primarily financial institutions, energy, retail and manufacturing. Since the beginning of the year, stocks of companies in these sectors have benefited greatly from the expectations that continued massive monetary and fiscal stimulus, and widespread vaccination of the population, will allow a relatively rapid return to economic normal. On the contrary, the performance of growth stocks, especially from the technology sector, has been significantly burdened by a strong increase in yields to maturity of government bonds, especially in the US.
Michal Stupavský
Investment Strategist at Conseq Investment Management, a.s.