The debate continues as to whether the rotation into ‘value’ during the final quarter of 2020 is signalling the start of something more sustainable. Given the disparity in valuations and likely nature of the economic recovery, I have been top-slicing some growth holdings given the extent of their outperformance and increasing exposure to more cyclical sectors and unfashionable markets, while remaining true to the portfolios' growth mandate.
However, it is no accident that the portfolios’ overweight positions in UK smaller companies have been retained. In addition to their intrinsic long-term advantages, there are short-term reasons to be positive, including attractive ratings, signs that investor confidence is picking up and likely government policies. But perhaps the current debate regarding value may provide the biggest catalyst of all for a rerating.