Rising Rates Can Be Good For Value

|Mar 30, 2021

With the expectation for increased stimulus, stronger economic activity and higher interest rates, Value has outperformed Growth since 4Q20

Chart 1:

The Rotation is Real

  • Since November of 2020 value has outpaced growth
  • As COVID restrictions ease and the economy reopens value is poised to continue to benefit relative to Momentum stocks
  • As the recovery plays out, sustainable high quality companies should benefit
  • Continued expectation of rising rates

Why Anchor Capital?

  • Value investors since 1983 with a focus on capital preservation
  • Foundational value portfolios that can act as a core holding positioned to take advantage of a continued economic recovery
  • Full ESG integration
  • Seek to identify and own high quality companies across the value spectrum
  • A balance on return and risk: historically strong sharpe ratios

 

For further insights, contact us today. Click here to download a PDF of this article.

Disclosures

Chart 1 source: FactSet financial data and analytics; Attribution. Past performance is not indicative of future results. Inherent in any investment is the possibility of loss.

This publication has been prepared by Anchor Capital Advisors, LLC (Anchor). This publication is for educational purposes only and should not be considered investment advice and does not constitute an offer or solicitation of any transaction in any securities referred to herein. Any recommendation contained herein may not be suitable for all investors. Although the information contained in the subject report (not including disclosures contained herein) has been obtained from sources we believe to be reliable, the accuracy and completeness of such information and the opinions expressed herein cannot be guaranteed. Opinions offered constitute the current judgment of Anchor and are subject to change without notice, as are statements of financial market trends, which are based on current market conditions.

The information provided should not be deemed as a recommendation to buy the securities or sectors presented.

All investments carry a certain degree of risk, including the possible loss of principal. It is important to review your investment objectives, risk tolerance and liquidity needs before choosing an investment style or manager. Equity investments are subject to market risk, active management risk, and growth stock risk. Indices are unmanaged and you cannot invest directly in an index.  They do not reflect any management, custody, transaction or other expenses, and generally assume reinvestment of dividends, income and capital gains. Performance of indices may be more or less volatile than any investment strategy.

Russell 1000 Value Index (R1000V): offers investors access to the large-cap value segment of the U.S. equity universe. The Russell 1000 Value is constructed to provide a comprehensive and unbiased barometer of the large-cap value market. Based on ongoing empirical research of investment manager behavior, the methodology used to determine growth probability approximates the aggregate large-cap value manager’s opportunity set.

The Russell 1000 Growth Index (R1000G): measures the performance of those Russell 1000 companies with higher price/book ratios and higher forecasted growth values.

The 10-year Treasury note/bond: is a debt obligation issued by the United States government with a maturity of 10 years upon initial issuance. A 10-year Treasury note pays interest at a fixed rate once every six months and pays the face value to the holder at maturity.

 

Share