Equity Dislocation Strategy

GMO’s Equity Dislocation Strategy has outperformed a passive value-growth implementation due to strong stock selection, a focus on the most mispriced securities, and thoughtful risk controls.

As Growth has enjoyed a massive bounce back so far in 2023, we examine the drivers of this year’s Value and Growth returns and discuss why we still have high confidence in our Equity Dislocation Strategy.

Today we see the biggest deviation in GMO’s Comfort Model since the internet bubble.

Although it appears that the long cheap Value/short expensive Growth train has indeed left the station, we believe that there is still plenty of track remaining before it reaches its destination.

In this webcast, Jeremy Grantham, Ben Inker, and Simon Harris discuss recent market volatility and provide an update on the opportunity the wide spread in valuations between Value and Growth stocks still presents.

Growth trap stocks have underperformed the broad growth universe since last summer by their largest margin for any comparable period in history, and Ben Inker expects more pain to come.

Amazingly, after one (admittedly strong) quarter, we have started to get the odd question as to whether the Value vs. Growth reversal has played out. Despite a late-quarter surge in Growth, the answer is an emphatic “No!”

Growth stocks around the world are priced with exceedingly high expectations, and names that have recently disappointed have been mercilessly repriced. No matter, there are ways to navigate these dangerous waters.