Insight
Paving a Long Runway for U.S. Growth Equities
Higher rates punished U.S. growth stocks in 2022. Today, improved valuations down market cap, market breadth, and opportunities for stock selection offer an attractive entry point for new allocations.
Key takeaways
- Years of zero-interest-rate policy have fueled multiple expansion and price momentum in the largest stocks, resulting in high name concentration across U.S. growth equities.
- A series of aggressive rate hikes that began in March 2022 have revealed interest rate sensitivity of U.S. growth stocks, compressing lofty valuation multiples.
- Across U.S. growth equities, we are seeing the most attractive relative valuations among small- and mid-cap segments as well as improved breadth.