BMVP - Rebalancing Act: Rethinking Growth Vs. Value

2025-03-12 05:45:00 ET

Summary

• Heading into 2025, a handful of mega-cap tech companies had tilted the U.S. public equity markets meaningfully into growth territory.
• Recent gyrations have revealed the potential risk in such positioning, and offered yet more evidence for why we believe it is time to rebalance portfolios by increasing exposure to value.
• While the U.S. mega-caps may find a way to extend their remarkable run, we believe tech earnings growth will likely moderate from here and that broadening economic growth should benefit cyclical sectors like financials, industrials and energy, and value stocks more generally.

By Joseph V. Amato

Heading into 2025, a handful of mega-cap tech companies had tilted the U.S. public equity markets meaningfully into growth territory. Recent gyrations have revealed the potential risk in such positioning, and offered yet more evidence for why we believe it is time to rebalance portfolios by increasing value exposure.

In this paper, we address the ongoing growth tilt across both public and private equity ((PE)) portfolios, as well as the potential risk if further impressive gains prove more elusive than expected....

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