In this video, John Bennett, Portfolio Manager of the Henderson European Focus Trust, provides an update on the Trust highlighting the rotation between growth and value stocks, valuations in the ‘growthy’ segments of the market, and touches on the inflation conundrum.

Key takeaways

• Equity markets continued to rotate between growth and value over the summer, but there has been a resurgence of outperformance from growth stocks.
• Valuations in the ‘growthy’ segments of the market have gone too far and are reminiscent of 1999 before the dot.com bubble; this could potentially provide value conscious investors with opportunities.
• Inflation is likely to remain high in the coming months and it may be stickier than expected, despite central banks messaging that it is “temporary” in nature.

Growth stocks Expand

A growth stock is any share in a company that is anticipated to grow at a rate significantly above the average growth for the market. These stocks generally do not pay dividends. This is because the issuers of growth stocks are usually companies that want to reinvest any earnings they accrue in order to accelerate growth in the short term.

Inflation Expand

The rate at which the prices of goods and services are rising in an economy. The CPI and RPI are two common measures.

Value stocks Expand

A value stock refers to shares of a company that appears to trade at a lower price relative to its fundamentals, such as dividends, earnings, or sales, making it appealing to value investors.

Valuations Expand

Metrics used to gauge a company’s performance, financial health, and expectations for future earnings eg, price to earnings (P/E) ratio and return on equity (ROE).