Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Will 2021 Be The Year Of Trend Change?

Published 01/05/2021, 12:14 AM
Updated 07/09/2023, 06:31 AM

YTD Returns

The catch-up in mid-cap and small-cap was dramatic in Q4 ’20 per the above numbers, but despite “value” doing better, it hasn’t yet really narrowed the gap between it and growth yet. Large cap growth and mid-cap growth saw the return differentials narrow between it and “value” the last 12 weeks, but the longer-term return differential has been substantial favoring growth since 2017.

The 12-week total return in mid-cap in Q4 ’20 was 22% and in small-cap it was 28.6%. Those numbers are eye-popping.

The TLT (not shown) actually saw a slight decline in Q4 ’20. Clients are being told to wait for the 10-year Treasury yield to trade above 1% yield.

Top 10 Holdings: 

Top 10 individual stock holdings: 

  • Microsoft: +42%
  • VWO: +15.5%
  • Schwab: +13%
  • JP Morgan: -6.26%
  • Tesla: +743%
  • QQQ: +48.6%
  • XBI: +48%
  • RSP: +12.7%
  • Oakix: +4.9%
  • The percentages listed are the 2020 full-year returns per Morningstar.
  • The bond funds will likely be reallocated and shifted in early 2021.

The biggest change in the second half of 2020 is that Vanguard FTSE Emerging Markets Index Fund ETF Shares (NYSE:VWO) and Oakmark International Fund Investor Class are now top 10 equity holdings as client portfolio gravitate to more EM and non-US given the return disparities between US and non-US.

Interesting fact: Oakmark International was down 22% YTD as of Halloween weekend and ended the year up 4.9%. David Herro swings from #1 in his peer group of 780 international funds to all the way down to the 99th percentile. This fund is not for the faint of heart. It will be discussed further in another email.

Summary 

Let’s see if the November ’20 elections have consequences for monetary and fiscal policy and capital market returns. Reasonable investors would have to conclude that value will start to outperform growth at some point given that growth has trounced value since – well – 2017. The last year where “value” outperformed across all market caps was 2016.

Take everything you read with substantial skepticism, both here and elsewhere. There is no one manager, one firm, one style, one methodology, one geography or any one asset class that will do well in every market. “Creative destruction” and “reversion to the mean” are catch-phrases for capital being reallocated from one investment to another. Any security or fund mentioned above can be sold without updating readers.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.