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Charting the Market: What to Make of the Changes in Style Market Leadership


Head of SPDR Americas Research

  • Value and growth styles have alternated market leadership at a higher rate and with more volatility in the past few months than at any point in the last 30 years.1
  • Unlike prior years, neither style has had a consistent run of extended outperformance in 2021.
  • Multi-factor core solutions that have balanced exposure to market factors may allow investors to mitigate the volatility and uncertainty of this leadership dynamic amid the recovery.

With our inability to prune the latest COVID variant from the market’s recovery timeline, we have entered a new branch of the reopening — oscillating between a return to normalcy and relapse. This has led to more frequent gyrations among style returns, with leadership becoming less persistent and more volatile.

With such variability between pro-cyclical (reopening stocks) and secular (high growth) exposures, investors have been left to decide which market style exposure to invest in — creating more uncertainty in an already uncertain world.

In this Charting the Market, I illustrate how volatile leadership has become, and what solutions investors may want to consider when navigating the increased choppiness of returns.

Growth. Now Value. Now Growth. Now Value.

In June, growth was underperforming value by 5% over the prior four weeks (i.e., rolling one-month returns), a two standard deviation event. Fast forward one month, and growth was outperforming value by 10% in the middle of July — a more than three standard deviation event. As of the end of July, growth’s outperformance did decline (+5% versus value in the prior four weeks), but was still above one standard deviation, as shown below.

Z-Score (Growth Minus Value Trailing One-Month Returns — Weekly Granularity)

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1Bloomberg Finance L.P., as of August 4, 2021. Growth = S&P 500 Growth Index; Value = S&P 500 Value Index.
2US Q2 GDP missed expectations while August Payrolls report beat expectations for example.


S&P 500 Growth and Value Index
A market capitalization weighted index. All the stocks in the underlying parent index are allocated into value or growth. Stocks that do not have pure value or pure growth characteristics have their market caps distributed between the value & growth indices.

Originally Posted on August 11, 2021 – Charting the Market: What to Make of the Changes in Style Market Leadership


The views expressed in this material are the views of SPDR Americas Research Team and are subject to change based on market and other conditions. This document contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected.

The information provided does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor’s particular investment objectives, strategies, tax status or investment horizon. You should consult your tax and financial advisor.

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All the index performance results referred to are provided exclusively for comparison purposes only. It should not be assumed that they represent the performance of any particular investment.

The value style of investing that emphasizes undervalued companies with characteristics for improved valuations, which may never improve and may actually have lower returns than other styles of investing or the overall stock market.

The market values of growth stocks may be more volatile than other types of investments. The prices of growth stocks tend to reflect future expectations, and when those expectations change or are not met, share prices generally fall. The returns on “growth” securities may or may not move in tandem with the returns on other styles of investing or the overall stock market.

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