As we have been echoing throughout Sowell’s weekly commentary, the economy continues to rebound from the covid pandemic woes and unlike 2020 much of March and most of 2021’s equity markets are riding the Value and Interest Rate wave, a market phenomenon not seen since the 2000-2005 timeframe if this continues. The S&P 500 posted strong gains of 4.4% in the month of March but underneath it all tells a much different story. Value stocks (underpinned by Financials and Industrials) trounced Growth stocks (underpinned by Technology and Consumer Discretionary) by 4.4% in March as reflected by the table below and the accompanying StyleAnalytics report.

Fueled by improving economic conditions and market liquidity from the expectation of Biden’s pandemic stimulus, on the surface equity markets measured by the S&P 500 again posted another month of strong gains returning 2.76%. However, the composition of those gains extended over the last six-months tell a vastly different story from the last several years which was largely led by high growth stocks. Unlike 2020 where over a period of 8 consecutive months growths stocks (i.e., Technology and Consumer Discretionary) outperformed value stocks (i.e., Financials and Industrials), over the last 6 months value stocks outperformed growth stocks by a cumulative margin of

2021kickstarted in lackluster territory following a record 2020 with stocks and bonds, S&P 500 and Bloomberg Barclays US Aggregate, respectively returning -1.01% and -0.72%. A closer examination points to large-cap stocks giving back some of the recent gains and longer-dated Treasuries selling off as yield spreads widened along the yield curve. However, the headline to start the year is categorically smaller cap stocks finally break free after years of disappointment gaining a positive return of 5% outperforming large-cap stocks by 6%. We are pleased to report a majority of Sowell’s main strategies and series outperformed, and in select cases posted positive returns, relative to the S&P 500 and Bloomberg Barclays US Aggregate losses attributed to our strategic positioning.