There has been a rotation away from growth stocks in 2025, with value stocks outperforming growth by nearly 9% year-to-date.1 This trend has emerged amid growing uncertainty and mounting recession fears, fueled by the economic fallout of Trump’s tariffs, the threat of resurgent inflation, and intensifying geopolitical tensions.
The recent earnings season has revealed an interesting dynamic: markets have responded sharply to forward guidance that fails to exceed expectations, even when underlying fundamentals remain solid. Such reactions underscore the cautious sentiment among investors.
After two consecutive years of returns exceeding 20%, it’s unsurprising to see some profit-taking and a shift toward reduced risk exposure, particularly in today’s volatile environment. While we expect short-term market fluctuations as the broader macroeconomic landscape unfolds, growth stocks remain fundamentally robust, supported by compelling and intact secular tailwinds. We view this market correction as a strategic opportunity for long-term growth investors.
1Source: Morningstar Direct. YTD data for Russell 1000 Growth Index and Russell 1000 Value Index as of 11/3/2025. Past performance does not guarantee future results.
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