Higher rates provide a second chance to play US value opportunities

Nowadays, US value trades at its steepest discount to growth since 1999. However, declining Covid-19 cases, a broad-based economic recovery, prospects of higher interest rates as we progress out of the pandemic, and the return of persistent inflation pressures should help close the valuation gap between growth and value stocks.

The economic and financial environment is shifting in favour of value over growth. In particular, investors should avoid hyper-growth stocks with high price-to-earnings ratios, as higher interest rates mean a higher discount rate, which lowers the net present value of future cash flows for those growth names.

You can now read the full whitepaper at the link below