Our strategy screen, now entering its 10th year of service, was designed to take a momentum-like approach to investment style. By following whatever approach is working in the market – be it growth, value, quality, or momentum – it seeks to mix prevailing sentiment with the cheapest, fastest-growing, highest-quality or fastest-rising stocks at any given moment (or in practice, each time it is refreshed).
But what happens if no one style is working? Faced with this conundrum two years ago, when all but a couple of the approaches tracked by the screen had underperformed the benchmark over the previous three months, growth was correctly identified as a looming winner.
In truth, given the massive re-rating in the market between November 2020 and May 2021, the screen would have likely done well even if a different style had won out. The combined effect of vaccines, massive monetary and fiscal stimulus, and swelling investor sentiment in an economic boom acted as a tide that lifted almost every boat.