Growth versus value bias

For years desperately low real yields have pushed pension funds and life companies into risky assets, as a means to fulfill promises to pensioneers and policyholders.

If corporate spending pushed up real yields, promises can met with lower risk.

For pension funds higher real yields mean lower liabilities through a higher discount rate.

Institutions would no longer have ths same appetite for CLOs.

Utilities today command a higher multiple than ths market (17 times versus 13 times), due to the institutional hunger for - inflation proofed- yield, private equity and infrastructure funds.

Higher investment should result in higer earnings. In normal times growth commands a higher premium than value.

In the end we might see and end to the huge bias towards value rather than growth stocks which characterised the market since 2000.