Bullish Move Expected for Value and Growth Stocks in Second Half of the Year

Recent market trends indicate that value stocks, which have been trailing behind growth stocks, may experience a much-needed boost in the upcoming months. Todd Rosenbluth, head of research at VettaFi, suggests that one of the major events that could contribute to this shift is the FTSE Russell’s annual rebalancing. According to Rosenbluth, “It’s worth paying attention to value,” as growth stocks have overshadowed value stocks for quite some time now.

Annual Reconstitution of Russell Indexes

The recent reconstitution of the Russell indexes has shed light on the disparity between growth and value stocks. While the iShares Russell 1000 Growth ETF has seen a 20% increase this year, the iShares Russell 1000 Value ETF has only managed a 6% gain. This discrepancy has led experts to believe that both growth and value stocks have a place in a diversified portfolio, with a potential tilt towards value stocks in the second half of the year.

FTSE Russell CEO Fiona Bassett emphasized the importance of reflecting market dynamics through the indices. According to Bassett, the Russell franchise offers various exposure options for investors, catering to those seeking either value or growth-oriented investments. This versatility allows investors to tailor their portfolios according to their preferences and risk appetite.

As of May 31, the FactSet data revealed the top holdings of the Russell 1000 Growth ETF and Russell 1000 Value ETF. The growth ETF’s key holdings include Microsoft, Apple, and Nvidia, highlighting the dominance of tech giants in this segment. On the other hand, the value ETF’s top holdings consist of Berkshire Hathaway, JPMorgan Chase, and Exxon Mobil, showcasing a mix of financial and energy companies.

The market is poised for a potential shift towards value stocks in the second half of the year. The annual rebalancing of the Russell indexes and changing investor sentiments indicate a favorable outlook for value-oriented investments. With the right balance of growth and value stocks in a portfolio, investors can capitalize on market opportunities and navigate through uncertain market conditions effectively.