A few questions have dominated our client conversations in 2021:

  • Will inflation prove transitory or persistent? 
  • How might changes to the tax code impact the markets? 
  • When will the Fed taper and tighten?  
  • What investment style wins out this year: growth or value?  
And that final question is the focus of the Weekly Wire.  As we head into the last five months of 2021 the growth vs. value race is setting up for a photo finish.  Consider that through July 30th, the Russell 3000 Growth Index is up 15.4% YTD, and the Russell 3000 Value Index is up 16.9%.  

What makes the closeness of those return streams even more interesting is that in early May the Value Index was outperforming the Growth Index by nearly 17%.  At that time, many on Wall Street thought the global recovery would run hotter for longer and bond yields would continue to move higher - both dynamics that favor economically sensitive value stocks.  Then, as we moved further through Q2, growth stocks came roaring back as bonds caught a bid and investors grew concerned about the durability of the expansion - with the Delta variant of Covid-19 only adding to those worries as of late.  

We continue to maintain a neutral position between growth and value in our discretionary portfolios, leaning on the portfolio managers of the actively managed strategies we use to navigate that style dynamic and find the most compelling opportunities at the stock level.  And ultimately, those factors that have and will continue to influence the trajectory of growth and value stocks – the pace and durability of the economic recovery, the persistency of the inflationary spike, the direction of bond yields – will also heavily influence the direction of monetary and fiscal policy into year-end.

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The views expressed are those of Brinker Capital and are not intended as investment advice or recommendation. For informational purposes only. Brinker Capital Investments, LLC, a registered investment advisor. 2178-BCI-8/3/2021

Tagged: Tim Holland, weekly wire, market perspectives, growth stocks, value stocks