Will it eventually come back?
The S&P 500 Growth index has shot ahead of its Value counterpart since 2009, though it wasn’t always top dog. This raises the question: can the pro-growth trend continue or, at this point in the cycle, should investors favour cheaper shares with less perceived risk of a correction? With technology shares making up 30% of the value of the whole S&P 500 index, they will play a key role. We believe that in general technology stocks offer defensive growth at reasonable valuations. In fact, earnings in the tech sector fell less than earnings for the overall S&P 500 Index in 2009, following the global financial crisis. We believe these popular ‘growth’ stocks have secular drivers that are powerful enough to override the economic cycle. We don’t invest according to labels, but in this slower-growth world, we’re keeping our faith in companies that can offer reliably higher earnings. See more in ‘Rethinking tech’, the lead article in our latest Investment Insights.