Value is the new Growth

The first quarter of 2021 is a wrap! While the overall S&P 500 is up +6% this year, it’s been a roller coaster if you breakdown the components.

Let’s take a look at our overall 2021 theme #Flight2Safety. S&P 500 Value stocks are up +10% YTD. Meanwhile, S&P 500 Growth names are only up +2%. Compare that vs. 2020 where Growth was up over +30% with Value roughly flat.

So what’s going on? We see 3 macro trends bifurcating the market:

💸 Inflation fears driving #RisingYields. 10-year treasury yield has jumped +90% since the beginning of the year. Concerns stem from record Fed purchases, significant $1.9T fiscal stimulus package and economy reopening. Huge beneficiary Financials are up +15% this year while high-growth Tech was pummeled. We believe Financials are at the beginning of a multi-year tailwind from #RisingYields.

💪 #COVIDRecovery momentum. Vaccine distribution has greatly accelerated this year with full 🇺🇸 adult eligibility around the corner. Many of our biggest gainers YTD are tied to #RevengeTravel anticipation, #Reopening businesses and #Back2Work office returns. We expect #COVIDRecovery themes to continue to play out into next year.

📱Rise of #RetailInvesting. #COVID19 accelerated a steady rise as retail trading volume mix doubled to 20% from a decade ago. We believe 2020’s market recovery (in particular Tech Growth stocks) was largely supported by #RetailInvesting. We’re watching the #Reopening closely－will #RetailInvesting support wane as discretionary spending options go back to normal? (ie DRINKS!!! 😁)

So what does this mean? Yes, growth-oriented aggressive strategy portfolios were weaker in Q1. However, we take a longer term view. We view strengths in Financials from #RisingYields and #COVIDRecovery stocks to continue and temporary weakness in Growth names from #Flight2Safety near-term correction to be an opportunity to buy the dip.