Citi Research's recent analysis suggests that the Growth investment style is poised to outperform in 2025, driven by its low macro risk exposures and diverse sector tilts. Despite the U.S. equity market's extended long positions, which are at a multi-year high, Growth's reasonable valuation and secular tailwinds make it an attractive option. However, the market is currently pricing in a "goldilocks scenario" of lower interest rates and narrowing credit spreads, while macro uncertainties, particularly concerning long-term interest rates, remain a concern. This backdrop has led to a mixed performance across investment styles, with Price Momentum leading in 2024 but facing potential headwinds from positive exposure to 10-year yields. Meanwhile, Value factors have struggled, with cyclical earnings potentially benefiting from higher oil prices and rising yields.
The Invesco S&P 500 Equal Weight ETF (RSP) experienced a decline, dropping 0.85% to $180.01 at 3:00 PM on Tuesday, December 17.