(Reuters) – Value stocks are poised to catch up with better-performing peers if Washington passes new stimulus spending or similar actions to restore economic growth, the chief executive of Calvert Management and Research, John Streur, said.
Financial and industrial stocks, as well as some utility companies, “seem likely to play a bit of catch-up and make up for the ground they lost” compared with growth stocks like technology companies, said Streur, who was interviewed on Monday for the Reuters Global Investment Outlook Summit 2020.
For example, he said, utilities or transportation companies would benefit from extra spending by business customers if they had new money from the government, seen as more likely with the incoming administration of President-Elect Joe Biden.
“The biggest impact of the election is the hope that we’ll have significantly more stimulus,” even if Congress remains divided, Streur said.
Value stocks have lagged many growth portfolios this year as the coronavirus pandemic shut down much of the U.S. economy and sent some technology companies soaring – “pandemic darlings” Streur called them.
Others also have speculated that cheaper value stocks are poised for a comeback once vaccines become widespread.
Through Monday, the Russell 1000 value index was down 3% for the year so far, while the Russell 1000 growth index was up 31%.
Calvert, with $23.4 billion under management as of June 30, is one of the oldest managers focused on sustainable investing. It will stay intact even while its parent, Eaton Vance Corp, is being acquired by Morgan Stanley, Streur said.
Streur said Calvert recently sold positions in Twitter Inc on concerns about spending and privacy at the social media platform. Like rivals, Twitter has faced criticism about the spread of misinformation and threats and has implemented some restrictions.
Such policing costs money, Streur said. “These are financial, material risks the company is having a difficult time managing.”
Follow Reuters Summits on Twitter @Reuters_Summits
(Reporting by Ross Kerber in Boston; Editing by Leslie Adler)