In May, growth stocks led the equity rally, outperforming other investment styles, according to Bank of America analysts.
The bank said in a note that the global Growth style outperformed the MSCI AC World Index by 2.7%, with Momentum also showing strong performance, outpacing the index by 1.5% as recent outperformers continued to excel.
In contrast, Value stocks had a mixed performance, with the top quintile of Value stocks outperforming by 0.9%, while a concentrated 30-stock list of Value stocks underperformed by 3.7%.
Bank of America notes that "Boosters," or stocks with cyclical characteristics suited for an upturn, outperformed "Bunkers" in all regions by 4.1% in May. Year-to-date, Boosters have surpassed Bunkers by more than 10% in the US, Europe, APxJ, and Emerging Markets, according to the bank.
This trend is supported by improved macroeconomic data and a strengthening global earnings cycle, suggesting that a tilt towards Boosters could continue to enhance performance.
However, they note that small-cap stocks faced significant challenges in May. Small Size was the worst-performing style, underperforming by 3.0%. Bank of America highlights two primary obstacles for small caps: sensitivity to the high cost of capital amid persistent inflation and the dominance of a few very large stocks driving market performance.
Despite typically performing well in upturns, these factors have hindered small-cap performance in the current cycle.