A year after the COVID-19 pandemic devastated stocks and upended the world economy, global equity markets hover near all-time highs. Initially, growth companies benefiting from social-distancing policies led the rebound. With vaccines rolling out and interest rates rising, investors have shifted their focus to beaten-down value stocks, and growth stocks may appear less appealing. This rotation likely won’t last. If rates fall back to low levels, as largely expected, profitable growth companies developing disruptive products likely will regain market leadership. But even if they settle at somewhat higher levels, markets will gradually adjust to the new rate environment and then get back to the business of fundamentals driving market returns.
Jennison Associates’ Mark Baribeau, CFA, head of global equity, and Sara Moreno, emerging markets equity portfolio manager, discuss the recent market movements they view as transitory, why they favor transformative growth stocks, where to find compelling growth opportunities, and how active managers can help navigate the way forward.