Back to Neutral on Growth vs Value to Begin 2026

Northlake’s Style and Market Cap model shifted back to a neutral stance to begin 2026 after spending just one month in a growth posture. The move was driven by changes in market trend and technical indicators, which have recently shown improved performance among mid- and small-cap stocks. This shift comes against a backdrop of continued moderate U.S. economic growth early in the new year and was further supported by the Federal Reserve’s decision to resume easing monetary policy with a reduction in the federal funds rate at its December meeting. Value stocks have historically performed better when economic conditions are stable and investor confidence in growth is improving.

As a result of the shift from growth to neutral, client accounts that follow Northlake’s models will move half of their style exposure from the Russell 1000 Growth Index (IWF) to the Russell 1000 Value Index (IWD). While Market Cap model indicators took a step toward mid cap exposure, the overall reading remains large cap, and model-driven allocations to the S&P 500 (SPY) will be maintained for at least one more month.

Clients invested in thematic strategies who do not follow Northlake’s models already maintain exposure to both growth and value styles, and no portfolio changes are required to align with the latest model readings. While non-model thematic strategies are informed by the Market Cap and Style models, they are not directly governed by them.

Our year-end client letters will be arriving later this month and will include a broader discussion of the Market Cap and Style models, along with other Northlake thematic strategies, and how they performed during 2025.

SPY, IWF and IWD are widely held by clients of Northlake Capital Management, LLC, including in Steve Birenberg’s personal accounts.  Steve is the majority-owner and President of Northlake, a registered investment advisor.  Northlake’s regulatory filings can be found at www.sec.gov.