Appetite for Risk Makes a Comeback
Factor Focus - April 2009
In April, equity markets were fueled by optimism that the global economy is stabilizing. Value factors markedly outperformed while momentum underperformed as investor appetite for risk made a comeback. Companies with the most debt and lowest earnings led the U.S. market's biggest six-week rally since 1938.
The reversal in market payoff from momentum toward value in the past two months is one of the most extreme style flip-flops ever seen. If value continues to outperform it will signal the current market rally has legs and that risk aversion is abating. Read more...