There is an interesting divergence today between Momentum, Growth, and Value.
Up until now, Value has lagged Growth and Momentum, as seen in this 5-year chart.
The underperformance of Value has been a topic of conversation of hedge fund managers I know who are Value investors.
Three-month momentum shows Value is trending up.
I believe styles like Growth vs. Value are largely driven by sectors, which is why I tend to focus more on the more granular sectors rather than broader styles. Today we see the relative strength is in Energy and Financials, which have been the lagging sectors lately.
So, this may not be enough to say the trend is changing to a period where Value outperformance growth for years, but it’s at least enough to be aware.
At some point, Value will take over leadership and when it does, it may continue for years.
For now, exposure to Value, including high dividend-paying stocks like we have, is having a good day while other factors are not.
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