El contenido del presente documento va destinado a inversores profesionales en el sentido de la Directiva MIF.
Throughout 2022, market performance was quite bifurcated.As interest rates jumped in response to rising inflation, certain factors (e.g., Value and Shareholder Yield) dramatically outperformed, while others (e.g., Volatility and Growth) underperformed considerably.Are economic and market conditions changing such that laggards may turn into leaders and vice versa?
- Long-duration securities are those whose cash flows are expected to be received further out in the future, such as long maturity bonds. Similarly, growth equities can also be thought of as longduration securities, focusing on expanding their business and market share, and less on near-term profitability (i.e., short-duration equities).
- Over the past year, higher interest rates driven by elevated inflation, had compressed the valuations for long duration assets, as shown by the underperformance of the long-term growth factor above. On the other hand, short duration equities saw meaningful outperformance, as exhibited above by the shareholder yield factor, which incorporates companies with high dividends and share repurchases relative to their market capitalization. In fact, low price-toearnings stocks, which have more of their value based on near-term cash flows, had their best year of relative performance in more than two decades.1
- In our view, the dynamic that drove last year’s performance divergence could potentially reverse if inflation and interest rates moderate this year. Moreover, we believe that stocks with stronger longterm growth potential could prove to have fundamentals that are more resilient to a weak economy.
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