2024 continued the 2023 “growth outperforms value” trend, but may provide an opportunity to increase investment in high-quality value stocks.
The Zhitong Finance App learned that in 2024, the trend of growth stocks outperforming value stocks in 2023 will continue. Since this year, the iShares S&P 500 Growth ETF (IVW.US) has risen 15%, while the iShares S&P 500 Value ETF (IVE.US) has only increased 6%. For many investors and investment managers, this actually provides an opportunity to increase investment in quality value stocks.
NewEdge Wealth Chief Investment Officer Cameron Dawson (Cameron Dawson) believes that due to “frighteningly high valuations,” many current growth stocks are at risk. However, he believes that some value stocks with strong balance sheets and cash flow still have potential for growth, especially those in the semiconductor supply chain, and established growth stocks such as eBay (EBAY.US) or Broadcom (AVGO.US) that have matured into value stocks.
Another perspective is to focus on “unloved industries,” such as utilities, materials, finance, and energy. Over the past few years, in an environment of rising interest rates and slowing global economic growth, these industries have not performed well. But once financial and economic conditions begin to improve, these industries are likely to experience a strong rebound. Furthermore, for value investors, the real estate sector is another area worth watching, as population-driven demand and limited supply, as well as attractive valuations, all bring strong fundamentals.
According to historical experience, at this stage of the market cycle, small-cap value stocks tend to perform well. Bailard's Chief Information Officer Eric Leve (Eric Leve) believes the next batch of AI winners will emerge from this category, and software-as-a-service (SaaS) and cybersecurity stocks in particular have room to rise.
Finsum Finance said that since growth stocks have significantly outperformed the market in the past few years, value investing is bound to be snubbed. However, many investors and investment managers also see this phenomenon as an opportunity to increase purchases, reduce risk, and diversify their portfolios.