It feels as though the market now has something of a growth-or-bust mindset. This is an interesting situation for investors that have somehow managed to remain open-minded.
Many growth plays received a boost from the change in behaviour caused by lockdown, including themes such as remote working, online streaming of entertainment, and promises to build back greener. At the same time, value stocks have done what they normally do when recession strikes: plummet on expectations of reduced profits and the potential failure of companies with weak balance sheets.
Notwithstanding last week’s sharp tech sell-off, given that the divergence between growth and value during lockdown caps off growth’s winning decade, it is little surprise we are seeing signs that the majority of investors have simply given up on value. For example, £671m of a record £679m outflow from UK active funds in June came from UK equity income funds – a take on value investing that has historically been particularly popular with Brits.