Value stocks are so in favor they’ve become momentum stocks

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Value stocks are so popular now that they are attracting momentum investors

As investors continue to rotate their exposure into value sectors, stocks in that corner of the market starting to take on characteristics of the momentum factor, an uncommon combination that bodes well for investors, said analysts at Alliance Bernstein in a research note out Wednesday.Many investing models, they note, have been “built to overweight stocks where there is agreement between Value and Momentum – i.e.

“It is being driven by the re-opening trade, and improving macro outlook, and is directly linked to continuously increasing nominal yields, a steepening yield curve and increasing inflation expectations. We are tactically long Value and think there is further to go,” the Alliance Bernstein analysts wrote.Sectors that are benefitting now – that is, screening as both value and momentum – include autos, banks, energy, and materials.

The Bernstein analysts note that the backdrop for this value rotation “is very different to any period in history. We are in a very different policy environment and possibly are at the start of a much bigger change in the inflation regime.”

 

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