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Will The Value Headwinds Let Up?

Second Quarter 2020 

Members of Wellington Management's Fundamental Factor Team consider the tactical and structural challenges facing value stocks.

From our sub-adviser, Wellington Management
Gregg Thomas, CFA
Director of Investment Strategy
Tom Simon, CFA, FRM
Portfolio Manager
Matt Kyller, CFA
Research Manager


One of the most interesting things about US market behavior in 2019 was not the strength of high beta1 factor returns but the weakness of value returns. In hindsight, the former was not surprising, given the reduction in two left-tail risks: the trade war and the potential for monetary policy over-tightening. Usually though, when beta is on a tear, value picks up this tailwind as a factor levered to positive sentiment around risk-taking and expectations of future growth.

1 Beta is a measure of risk that indicates the price sensitivity of a security or a portfolio relative to a specified market index.


Important Risks: Investing involves risk, including the possible loss of principal. • Different investment styles may go in and out of favor, which may cause certain funds to underperform the broader stock market.


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