That’s a > 3,200 bps difference between large cap growth and large cap value! When growth stocks are the place to be, value is just not going to cut it.
The biggest discrepancies in the sector weightings giving large cap growth a huge advantage over large cap value are Technology (32% vs. 12%) and Comm Svcs (13.3% vs. 8.6%). On the other hand, large cap value was weighed down by being overweight Financial Services (18% vs. 10%) and Industrials (11.7% vs. 5.7%).
Mid Cap Growth vs. Mid Cap Value also had similar results and sector weighting differences, except another standout comparison comes in the way of Healthcare (Growth at 22% vs. Value at 10%).
When we look at Small Cap Growth vs. Small Cap Value, the sector weighting differences are much greater. Healthcare shows the largest difference between growth and value (26% vs. 5%), followed by Technology (25% vs. 9%).
It’s not difficult to see why there are huge differences between growth and value in 2020. Just take a look at some of the household name large cap growth stocks hitting it out of the park YTD (as of 10/20/2020):
Compare those YTD results with the biggest losers in large cap value:
Boeing -48% (Industry: Aerospace and Defense)
Exxon Mobil -48% (Industry: Oil & Gas Integrated)
ConocoPhillips -47% (Industry: Oil & Gas E&P)
Citigroup -44% (Industry: Banks - Diversified)
Chevron -37% (Industry: Oil & Gas Integrated)
In 2020, being able to actively overweight growth vs. value and large vs. small has proven to be a winning strategy. When the market creates these huge differences within the nine style boxes, tactical and actively managed investment strategies may provide a performance edge against a typical buy and hold methodology.
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Optimus strategies are offered as separately managed accounts and can be accessed on multiple platforms/TAMPs. Please contact us for a complete list.
Optimus Advisory Group manages liquid tactical and alternative investment strategies that meet the needs of our clients. We use a disciplined, quantitative methodology to build and manage our portfolios.
Over a full market cycle, these strategies are designed to provide superior risk-adjusted returns while maintaining a low-correlation to traditional market indices.
All strategies are net results after subtracting a 1.50% annualized fee.
The performance results shown include the reinvestment of dividends and other earnings. Comparison of the Optimus Advisory Group Programs to any other indices is for illustrative purposes only and the volatility of the indices used for comparison may be materially different from the volatility of the Optimus Advisory Group Programs due to varying degrees of diversification and/or other factors. Different types of investments involve varying degrees of risk and there can be no assurance that any specific investment will be profitable. Optimus Advisory Group does not make any representation that the Optimus Advisory Group Programs will or are likely to achieve returns similar to those shown in the performance results in this presentation. Optimus Advisory Group reserves the right to trade different funds within their models.
The historical S&P performance results (and those of all other indices and index funds used as proxies for indices) are provided exclusively for comparison purposes only, so as to provide general comparative information to assist an individual client or prospective client in determining whether the performance of the Optimus' portfolio meets, or continues to meet, his/her investment objective(s). It should not be assumed that any Optimus portfolio holdings will correspond directly to any such comparative index.
Different types of investments and/or investment strategies involve varying levels of risk, and there can be no assurance that any specific investment or investment strategy (including the investment strategies devised or undertaken by Optimus Advisory Group) will be profitable for a client's or prospective client's portfolio. All performance results have been compiled solely by Optimus Advisory Group and have not been independently verified.
Performance results reflect hypothetical results that were achieved by means of the retroactive application of a back-tested model and, as such, the corresponding results have inherent limitations, including: (1) the model results do not reflect the results of actual trading using client assets, but were achieved by means of the retroactive application of each of the above referenced models, certain aspects of which may have been designed with the benefit of hindsight; (2) back-tested performance may not reflect the impact that any material market or economic factors might have had on the adviser’s use of the model if the model had been used during the period to actually manage client assets; (3) for various reasons (including the reasons indicated above), clients may have experienced investment results during the corresponding time periods that were materially different from those portrayed in the model.
The Optimus performance results do not reflect the impact of taxes.
Advisory Services offered through Optimus Advisory Group, a Registered Investment Advisor.
