Momentum, a factor that by definition does well during reliable market trends, was hit hard by the late-2018 selloff and is down 3 percent this year, according to a Bloomberg-compiled portfolio. Amid market schizophrenia, it’s a decidedly unpredictable investing strategy.
“Just when you think momentum growth is going to roll over, it then bounces back again,” said Jason Williams, a fund manager at Lazard Asset Management. “That speaks to the frustration that any investor that’s had a major style bias has suffered over the last decade.”
Amid all the cross currents, the team at Evercore recommends investors be led by macro trends, which they argue are having an elevated influence on factor volatility. For them, that means favoring the growth style as economic activity matures.
“We expect some improvement in economic and earnings growth ,” they wrote in a March 29 note. “But until that forecast is resolved, growth factors and momentum should outperform value.”
This article was provided by Bloomberg News.