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Equity Duration Should Reinforce Value Rotation

May 03, 2021 2:03 PM ET1 Comment


  • Equity duration, the sensitivity of a stock's cash flows to the discount rate, is likely close to peak levels.
  • U.S. indexes and growth stocks could be vulnerable to the next move in rates.
  • All else equal, higher rates are considered neutral to positive for short-duration value stocks and negative for long-duration growth stocks.
  • Supporting a further rise for value stocks is that their fundamental improvements are more than offsetting any rise in relative valuation.

Interest rate financial and mortgage rates concept. Hand putting wood cube block increasing on top with icon percentage symbol upward direction
Photo by marchmeena29/iStock via Getty Images

By Sam Peters, CFA

Fundamentals Support Further Value Run

Equity duration is a less familiar term among equity investors, but it should be on everyone's mind. As the reopening heats up, discussion is growing concerning the impact

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