US equity style investment dynamics have taken a sharp turn in 2023, with growth-oriented stocks rebounding relative to their value-oriented counterparts, according to new insight from Morningstar Indexes.
The Morningstar US Large-Mid Cap Broad Growth Index, which is aligned with the Morningstar Style Box and designed to represent the large-mid cap growth segment of the US equity market, has risen 24.04% in 2023 as of June 26. This represents a major rebound from its 31.7% decline in 2022 and is 20 percentage points above its value index counterpart this year.
The new research hones in on the factors, notably investor excitement around stocks expected to benefit from AI or artificial intelligence, which have led Morningstar’s US and global growth indexes to outperform their value counterparts in 2023. These include big stocks like Nvidia, Microsoft and Apple, the three holdings with the largest weight within the Morningstar US Large-Mid Cap Broad Growth Index.
Dan Lefkovitz, Strategist, Morningstar Indexes:
“Tech-related growth stock concentration was a feature of the US equity market in 1999 and 2020. Both of those periods gave way to regime change. But the growth stock rebound following the 2022 correction shows that style leadership is both fluid and difficult to predict.”
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