Stocks just closed out their best third-quarter performance in a decade, but Bank of America expects growth stocks to soon take a back seat to value names.
The Russell 1000 Growth Index opened a 36 percentage-point lead over its value-focused peer on Thursday. That’s the biggest outperformance for growth stocks in data going back to 1979, Bank of America said in a note to clients.
Still, investors’ heavy concentration in growth sets value up for a bounce-back. The bank recommended high-quality value stocks to ride out election-season volatility and the US economic recovery.
Positioning, valuation dispersion, and “an expected recovery in the profits cycle” point to a near-term rally for value, the team of strategists led by Savita Subramanian added.
Visit the Business Insider homepage for more stories.
The stock market is hot off of its best third-quarter performance in a decade, and growth names are set