Mid-Year Letter For 2021

GMO

Ben Inker

Research

7 Pages

GMO’s mid-year 2021 letter outlines a turning point in equity markets, arguing that the long-awaited reversal from Growth to Value has begun and could extend for years. The piece leans into a controversial stance that Growth remains in a bubble while global Value and non-U.S. equities offer one of the strongest opportunity sets in over two decades.

Key Takeaways

Value Reversal Momentum: Since November 2020, MSCI ACWI Value outperformed Growth by nearly 1200 bps, signaling an early-stage rotation with potential multi-year continuation.
Growth Bubble Concerns: Despite recent pullbacks, speculative behavior persists, with certain Growth segments still priced for unrealistic outcomes relative to fundamentals.
Global Valuation Gap: U.S. equities trade at elevated multiples versus non-U.S., creating a rare opportunity set not seen in over 20 years based on relative valuation spreads.
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