U.S. Stocks – Magnificent Seven Market Value as a Percent of S&P 500 Market Value The Magnificent Seven U.S. stocks represent 31% of the S&P 500’s market cap, making diversification discussions increasingly relevant. A well-diversified portfolio is essential for effective risk management. Image: Goldman Sachs Global Investment Research
10-Year U.S. Treasury Yield Macro Fair Value BofA’s macroeconomic framework estimates the fair value of the 10-year U.S. Treasury yield to be between 4.10% and 4.15%, with a year-end target of 3.75%. Image: BofA Global Research
Valuation – Relative Forward P/E of Russell 1000 Value vs. Growth Indices The current landscape for value and growth investing reveals a significant and persistent valuation gap, with value stocks trading at lower prices relative to their growth counterparts. Image: BofA US Equity & Quant Strategy
Performance – Large Cap Growth vs. Small Cap Value Large-cap growth stocks are outperforming small-cap value stocks at a level not seen since the dot-com bubble era. Historical patterns and the potential for economic recovery indicate that this trend may change in the long term. Image: BofA Global Investment Strategy
U.S. Value Flows Over the past 18 months, outflows from U.S. value funds have been substantial, totaling a record $100 billion. Image: BofA Global Investment Strategy
MSCI World Value vs. Growth Given the current market dynamics, will the outperformance of growth stocks over value stocks be reversed in the future, with value stocks potentially taking the lead? Image: Goldman Sachs Global Investment Research
FMS Investors – Net % Saying Gold Overvalued According to FMS investors, gold is currently considered the most overvalued since August 2020, raising concerns about a potential market bubble. Image: BofA Global Fund Manager Survey
Performance – Growth vs. Value During times of scarce growth, growth stocks tend to outperform value stocks, while during periods of plentiful growth, value stocks tend to outperform growth stocks. Image: Goldman Sachs Global Investment Research
Growth vs. Value – Relative Price Return In 2023, growth stocks have outperformed value stocks by a significant margin. This is often the case when economic growth is relatively weak and inflation declines. Image: Goldman Sachs Global Investment Research
Long Only Positioning in Value vs. Growth Value is still 53% underweight vs. Growth, highlighting a significant preference among investors for growth-oriented investments over value-based ones. Image: BofA US Equity & Quant Strategy
Returns – Value vs. Growth Value stocks tend to outperform growth stocks when considering a longer time frame. Image: BofA Research Investment Committee