Finally, the time of value investors has come as after many years of surrendering to growth, value outperformed globally thanks to the rebound in Energy and Financial stocks. While in Europe growth stocks managed to catch up and even overcome value peers in June, in USA the situation is still in favour of the latter as growth suffered from profit taking within the Tech sector – a star of the last year.

Value across the globe was driven by the cyclical names from Energy (39.2%), Financial (26.7%), and Industrial (17.6%) sectors, which were clear market leaders in the first half of this year. On the other hand, defensive companies operating in Health Care and Consumer Staples lagged behind after losing attractiveness in the eyes of investors, partially because of the envisaged growth in consumer prices.

There were apparent attempts to rotate out of the pandemic winners, but those companies, whose growth stories remain intact for the long-term, have nevertheless continued to outperform the market. This was clearly seen in case of Top 8 constituents, which as of February have been considerably trailing the index with 3.5% underperformance. As first half progressed, however, the tides turned, and portfolio reached 11% outperformance per end of June because quality companies continued to deliver strong fundamental results and it could not have been neglected by the markets.

Size-wise, despite release of good operational results large caps could not beat small caps, which benefited from growing risk appetite of investors the most, and with 16.6% gain notably stayed behind 18.5% – result delivered by smaller companies.

Quality stocks, supported by the superior fundamental results, managed to overcome massive rotation witnessed in January and February and demonstrated good performance during 1H 2021. U.S. quality companies are gradually making a come-back with performance catching up with that of the benchmark’s, while in EU and Switzerland quality stocks have already delivered performance alpha.

Generally positive mood reigning on the stock markets was supported by the visible signs of economic recovery and hopes for complete restoration of economic activity given increasing vaccination rates as well as pick-up in the consumers spending. With people no longer holding back their funds, subsequent increase in consumer prices was a simple matter of time. Additionally, banks and governments continued their support with massive fiscal stimulus packages. Now, the markets tend to watch inflation figures and twitch more often as the talks about increasing rates become louder.