Value investors have seen their portfolios soar, while growth stocks have languished. In this paper we look at some of the drivers behind recent market moves, including the effect of rising interest rates, earnings disappointments and the subsequent de-rating of growth stocks.
- Conditions in 2017 normalised after a ‘perfect storm’ in 2016.
- Active growth managers focused on high quality stocks typically fared the worst.
- Downtrodden valuations provided a good entry point into high quality, high growth companies.
- Academic studies and our own analysis suggests that the benefits to growth and quality stocks are longer term in nature.
A more positive 2017 - and outlook for 2018 - demonstrates the importance of sticking to a philosophy and process through the difficult times.
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