Growth versus Value update

Interesting style fact.

The value factor has been outperforming since July 2012 its growth sibling by 8% in Europe and more than 6 % in the US after years of underperformance. This has started to be visible since Q4 2012 but I would expect the phenomenon to continue.

A potential explanation is the valuation differential between those “growth” stocks and the value end of the market.

This is positive for the economy: a bigger breadth should give legs… and crucify equity portfolio managers still owning too many expensive “structural growth companies”. 

With the US economy improving, we could expect Europe to improve in 2014 despite its fiscal contraction, which should give more legs to Value stocks. 

The Growth style will probably make a last come back in the coming weeks/months. This will be the opportunity to sell the Novo Nordisk/SAP/Unilever/HSBC of this world and get their counterparts: Lundbeck/Nokia/Carrefour/Southern European bank. 

 MSCI Europe Growth v MSCI Europe Value