The great rotation – Cover story


THE GREAT ROTATION


A great rotation from growth to value stocks is on the cards. Andrew Holt sifts through the evidence to find out what it means for investors.


from a ‘lockdown’ type of world and into areas expected to cap- italise on a speedier return to normal life and better economic growth.


Economic stimulus in the form of commitments to renewable energy and infrastructure will mean certain construction and utilities companies do well. President Biden’s $2.2trn (£1.6trn) infrastructure and green package aimed at increasing carbon neutrality in the US by 50% within nine years while boosting the country’s infrastructure is a major boost in this regard.


Overcoming underperformance


The strong consensus view is that value stocks – those shares often identified as cheap by some measure, typically their price-to-earnings or price-to-book multiples – are set to over- turn a long period of underperformance relative to their faster growing peers. With this rotation comes a whole new debate around the future of value investing – which in historical terms has proved an


Issue 103 | May 2021 | portfolio institutional | 19


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