The positive news around the discovery of various potential vaccines is far more consequential for markets than the election of Joe Biden, but neither event is likely to mean a prolonged period of outperformance for value stocks, according to the guests on the latest edition of the FTAdviser podcast.
Steven Bell, head of Macro and a fund manager at BMO Global Asset Management, said the multi-asset fund range on which he works began to buy some value stocks in September as “there was increased optimism about the prospects for a vaccine”, but he is now “not sure how much further there is to go.
"The upside from here is limited as we do not see a lot of inflation coming into the system.”
Keith Wade, chief economist at Schroders, said: “I think it will be a difficult environment for value stocks, the US government stimulus is really more fiscal support than a stimulus, it is a bridge really, as demand in the economy had collapsed, and lots of the existing fiscal measures will come to an end.
"I think the challenge for value is that banks are a big part of the value part of the market, and for banks to make money, they really need a steeper yield curve.”
Paul O’Connor, head of multi-asset at Janus Henderson, said: “It shows what extraordinary times we live in that we are debating whether a trillion dollar stimulus is enough to have an effect, but then all of the numbers this year have been huge, including the double digit drop in GDP, but the vaccine is more important than the stimulus, and we may see some stocks that have a sensitivity to value do better.”
You can listen to the full podcast by clicking on the image above.