The August 2026 edition of the Schroders Equity Lens is now available: Schroders Equity Lens
Summary:
- The hyperscaler story has not changed dramatically: revenues strong, capex spend high (slide 5-7)
- But market scepticism has risen: valuations for many big tech companies are at/near cheapest for a decade (slide 8)
- Performance continues to broaden out (slide 9):
- Value > growth
- EM, Japan, UK > US
- In the US: small cap > large cap, Magnificent-7 underperforming
- Earnings expectations continue to be strong, EM exceptionally so (slide 12)
- Despite mega cap cheapening, aggregate valuations remain high in most markets, across most valuation metrics.
- EM stands out as cheap on a forward P/E basis. This hinges on whether sky-high consensus earnings growth forecasts materialise (slide 11)
- Tactical longs for investors who are worried about the risk of stagflation (slide 13):
- value and quality styles, companies with conservative investment strategies, energy equities, defensive sectors.
- gold equities worth considering; careful security selection needed in real estate and IT. For more on this topic see this recent article: Adapting asset allocation to the risk of stagflation
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