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Alternative Market Briefing

U.S. long/short hedge fund bets on return of value stocks

Wednesday, April 21, 2021

B. G., Opalesque Geneva:

From the March downturn through the end of 2020, growth stocks delivered a 1.5x greater return than their value counterparts. In 2021, the tables have turned: value stocks are pulling away to lead the market while the growth sector is nearly flat YTD, reports Nasdaq. March 2021 also marks the first time in months where daily volume in the S&P 500 Value ETF (IVE) was higher than that of IVW, its growth counterpart, indicating interest is shifting into value stocks and related funds.

From 2010 to 2020, the Russell 1000 Growth Index delivered an annualized return of around +17%, while the Russell 1000 Value Index annualized about +10%. But the growth index's outperformance largely comes from technology stocks.

Now, the outperformance of growth relative to value is approaching levels not seen since the 1930s and the dot com bubble. According to Zacks Investment Management, it is just a matter of time before investors rotate capital away from growth and towards value.

Barry Bannister, head of institutional equity strategy at Stifel, believes the same. After a decade of underperformance versus growth stocks, value stocks could outperform their growth peers over the next four years as "excessive stimulus" fuels a commodity boom, he sai......................

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