As our latest Market Map Monthly Performance Report shows, the tech quintet of Apple, Facebook (FB), Amazon (AMZN), Netflix (NFLX) and Alphabet (GOOGL), which has been an enormous driver of recent US large cap equity performance, weakened during the latter part of July, driven by Facebook’s weaker growth projections.
This poses two potentially awkward questions for investors:
Question 1: FAANGs have been the dominant sectoral leadership group in US large caps for two years, and a significant part of the US equity performance story. If we were to see the FAANG weakness as meaningful inflection point, what US sector – if any – would take up the mantle?
Question 2: If we look at the US large cap market through a factor lens, we see that the growth factor has delivered substantial outperformance versus the value factor on a year-to-date basis. That outperformance began almost two years ago with FAANG strength being a significant contributor.
July’s weaker FAANG return raises another question for factor-based investors about whether that growth versus value pattern will continue.
For more on our latest Market Map, watch Philip Lawlor’s video summary.
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