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While one month does not define a long-term trend, the data is too significant to ignore. It does not, however, signal a straightforward revolution. Instead, it points to a maturation of the bull market, where investors are beginning to look beyond the obvious winners for opportunity.

This selective shift is a powerful reminder of the importance of diversification across both styles and market caps. The past month demonstrates that value has compelling momentum, but its reign is beginning in the corners of the market, not the center. For investors, the key takeaway is that the engine of market performance may be shifting from a single cylinder to multiple ones. Whether value can eventually pull the entire market into its orbit is the critical question for the quarter ahead.
 

Conclusion: A Story of Nuance, Not Revolution

While one month does not define a long-term trend, the data is too significant to ignore. It does not, however, signal a straightforward revolution. Instead, it points to a maturation of the bull market, where investors are beginning to look beyond the obvious winners for opportunity.

This selective shift is a powerful reminder of the importance of diversification across both styles and market caps. The past month demonstrates that value has compelling momentum, but its reign is beginning in the corners of the market, not the center. For investors, the key takeaway is that the engine of market performance may be shifting from a single cylinder to multiple ones. Whether value can eventually pull the entire market into its orbit is the critical question for the quarter ahead.

The past month delivered a significant shift in equity market leadership, but the story is more nuanced than a simple changing of the guard. A detailed analysis of the performance data reveals a powerful rally in value stocks, yet this resurgence was strikingly selective, flourishing in specific segments of the market while the dominance of large-cap growth persisted.

The most unequivocal victory for value occurred outside the United States. In developed international markets, the divide was dramatic. The iShares MSCI EAFE Value ETF (EFV) soared 3.03%, starkly outperforming the iShares MSCI EAFE Growth ETF (EFG), which declined -0.54%. This staggering gap of over 3.5 percentage points highlights a potent global appetite for value, likely driven by attractive relative valuations and a bet on cyclical, economically sensitive sectors.

Within the U.S., the narrative splits along market capitalizations. The most robust value strength was on full display in the small-cap space. The Russell 2000 Value ETF (IWN) surged an impressive 4.50%, handily outperforming its growth counterpart (IWO), which posted a strong but lesser gain of 4.31%. This pattern held across index providers, with S&P SmallCap Value (SLYV, +4.72%) and Morningstar Small Cap Value (ISCV, +3.11%) also leading their growth peers. This suggests that investors hunting for opportunity are finding it in cheaper, more financially stable small companies.

However, a closer look at larger companies reveals a different story—one where the long-standing growth trend has not yet been broken. Contrary to the broader theme, the iShares Russell 1000 Growth ETF (IWF) gained 1.65% last month, actually outperforming the iShares Russell 1000 Value ETF (IWD), which returned 0.85%. This indicates that the momentum for mega-cap technology and growth-oriented stocks remains resilient, even as value gains steam elsewhere.

The mid-cap space presented a middle ground, but still one favorable to value. The iShares Russell Mid-Cap Value ETF (IWS) gained 0.65%, while the iShares Russell Mid-Cap Growth ETF (IWP) fell -0.47%. This further reinforces the idea that the value rally has its strongest footing in the small- to mid-cap segments of the market.
 

What’s Driving the Selective Rotation?

This bifurcated performance suggests a market carefully weighing its options. The surge in small-cap and international value indicates a rising appetite for risk and a bet on economic resilience, which typically benefits cyclical and undervalued companies. Meanwhile, the steadfastness of large-cap growth suggests continued confidence in the earnings power and defensive qualities of market giants, even at elevated valuations.
 

Conclusion: A Story of Nuance, Not Revolution

While one month does not define a long-term trend, the data is too significant to ignore. It does not, however, signal a straightforward revolution. Instead, it points to a maturation of the bull market, where investors are beginning to look beyond the obvious winners for opportunity.

This selective shift is a powerful reminder of the importance of diversification across both styles and market caps. The past month demonstrates that value has compelling momentum, but its reign is beginning in the corners of the market, not the center. For investors, the key takeaway is that the engine of market performance may be shifting from a single cylinder to multiple ones. Whether value can eventually pull the entire market into its orbit is the critical question for the quarter ahead.

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