Goldman Sachs says value stocks will outperform in the near term – but growth stocks will take the lead by end of 2021

Goldman Sachs says value stocks will outperform in the near term – but growth stocks will take the lead by end of 2021

The rotation into value stocks spurred by the global economic recovery is mostly over, but investors should expect near-term outperformance of value names before growth stocks regain market leadership by the end of 2021, according to Goldman Sachs. "History, valuations, positioning, and economic deceleration indicate that most of the rotation is behind us," Goldman analysts led by Ben Snider said in a recent note. Following a long period of outperformance, growth stocks have recently taken a back seat to value stocks, which have soared as investors position for the economic recovery from the COVID-19 crisis. How much further the "growth unwind" lasts is among the most common questions the bank fields from clients, the analysts wrote. While strong GDP growth and rising interest rates point to further outperformance of value stocks in the near term, growth will regain leadership in late 2021 or early 2022. The recent stretch of underperformance of growth stock already ranks among the largest in magnitude tracked by the bank. But there will still be a back and forth at play, and investors should be aware that other periods of rotation may not provide a blueprint for how long the rotation into value stocks lasts. "Until