- Head of Multi-Asset Strategy
Italy, Institutional
ChangeThe views expressed are those of the author at the time of writing. Other teams may hold different views and make different investment decisions. The value of your investment may become worth more or less than at the time of original investment. While any third-party data used is considered reliable, its accuracy is not guaranteed. For professional, institutional, or accredited investors only.
Recently, I’ve been thinking about whether we are transitioning from the post-GFC market regime to something new and what that could mean for asset allocators and portfolio positioning. While allocators can’t assume they will be able to spot the next regime’s winners, they can be careful about their exposure to the prior winners and think broadly about which areas of the market are likely to offer more compelling returns over the next 5 – 10 years.
In terms of prior winners, growth stocks certainly stand out. We’ve been in a decade-long period in which growth dominated, aided by innovation and technologies that transformed the economy and fundamentals. But as I’ve said before, there is clear historical evidence of a growth/value cycle (Figure 1), and so I expect to see value regain leadership eventually. We may also be moving into a more volatile world in which stability takes priority over innovation, which would tend to favor value.
Figure 1
Portfolio implications
Value — In this new world, valuations should begin to matter in a way they haven’t at times during the last decade. Value could provide a margin of safety when we’re in volatile markets, meaning that stocks with lower valuations should sell off less in some scenarios. In addition, the sector mix in the value universe, which tends to include areas like energy, natural resources, and financials, may be more attractive in what I believe will be an inflationary regime.
Stability — There’s an adage that when growth is scarce, growth stocks outperform, and this was true for much of the last decade. Going forward, I believe, stability will be scarce and stable stocks are likely to outperform. In terms of specific types of strategies that fall into a “stability” bucket, low-volatility strategies may have a place, but it’s worth noting that they tend to be challenged in rising-rate environments. I would look to “compounders” (equity strategies focused on companies with high and stable free-cash-flow yield and the potential to grow modestly but steadily over time) and to defensive global equity strategies that seek to preserve capital in adverse markets while providing equity-like returns in up markets. (Our Fundamental Factor Team provides some additional thoughts on the need for defensive strategies here.)
Income — Equity income hasn’t been an area of focus among allocators for some time, but that may change. The immediate cash flow may be more attractive in an inflationary world, but I also look to dividend growers as another source of calm in a storm: Companies that are able to grow their dividends over time may provide an element of quality and stability.
Growth — While we may be approaching a long-awaited pivot to value, investors in an uncertain world may be well advised to maintain a diversified factor footprint, and that includes exposure to growth. That said, allocators may need to consider a different kind of growth in the next decade — it might be steadier, self-financing, and less-speculative growth, for example. Or it might be growth driven by long-term thematic trends that will transform the way we live.
More ideas for a new market regime
In a recent paper, I consider changes in four additional areas — inflation, the business cycle, interest rates, and active management — and how allocators can prepare.
Expert
Related insights
Showing
of
Insights Posts
US election special: which investment themes win at the polls?
Continue reading
7
min
Article
2025-10-31
URL References
Related Insights
Stay up to date with the latest market insights and our point of view.
Read next
Showing
of
Insights Posts
US election special: which investment themes win at the polls?
The upcoming US election could be one of the most momentous in recent history. How could the result affect different investment themes? Our thematic team investigate the potential implications for investors.
7
min
Article
2025-10-31
Unearthing the unseen in geopolitics
Unearthing the unseen in geopolitics. Watch Geopolitical Strategist Thomas Mucha delve into the investment impact of structural geopolitical shifts and share his latest take on the upcoming US election.
30
min
Event replay
2025-09-30
Weekly Market Update
What do you need to know about the markets this week? Tune in to Paul Skinner's weekly market update for the lowdown on where the markets are and what investors should keep their eye on this week.
4
min
Video
2025-12-31
Can central bank independence survive?
Can central bank independence survive? Macro Strategist John Butler discusses the challenges faced by central banks in an increasingly fraught political environment and how investors should adjust.
5
min
Article
2025-09-30
Monthly Asset Allocation Outlook
How to evolve your portfolio for the latest market conditions? Explore the latest monthly snapshot of our Multi-Asset Team’s asset class views.
4
min
Article
2025-10-31
Sahm rules are meant to be broken
Fed easing is finally here and fundamentals remain favorable. But what about that election? Members of our Investment Strategy & Solutions Group offer their outlook, including their latest views on equities, bonds, and commodities.
12
min
Article
2025-10-31
What’s next after Iran’s missile attack on Israel?
Geopolitical Strategist Thomas Mucha shares his analysis of the latest escalation in the Middle East conflict, including his thoughts on a wider regional war and the market implications.
2
min
Article
2025-10-02
Chart in Focus: What does the rate cut mean for equities and bonds?
Are rate cuts positive? On the heels of the much-anticipated initial Fed cut, in this article we look to historic precedent for where the markets could go in the coming months.
3
min
Article
2025-09-30
An active investor’s guide to growth equities
Our experts offer their view on the current economic environment, explore best practices for investing in high-quality growth equities, and highlight where they see opportunity now.
6
min
Article
2025-09-30
Chart in Focus: The need to differentiate market growth from macro growth
Macro growth and earnings growth have been misaligned for the last 15 years, particularly in the US and China, but in opposite directions. For equity investors, what would be the key to identify real growth?
3
min
Article
2025-09-30
URL References
Related Insights
Monthly Market Review — August 2024
A monthly update on equity, fixed income, currency, and commodity markets.
By
Brett Hinds
Jameson Dunn