Winners rotate

It is widely believed that by taking bets on a particular factor (such as a theme or investment styles like value, growth, quality, etc.), one can deliver strong performance over time. Often, 'concentrated bets' are associated with 'high conviction,' which is further believed necessary for better performance. However, in reality, this may not be the case. Investors need to remind themselves that "winners rotate." Today's best-performing segment of the market may or may not do well in the future, and vice versa. No particular style performs consistently every year. Likewise, sector and market-cap performance keeps rotating year on year. Before the comeback in 2021, for three consecutive calendar years (2018, 2019, 2020), value style underperformed most of the other styles of fund management. Quality style worked well in 2018 and 2020 but did poorly in 2017 and 2019. Sectors like IT services and pharma were among the worst-performing in 2016 and 2017 compared to the broader market. Subsequently, IT services outperformed most other sectors in 2018, 2020 and 2021, and pharma outperformed in 2020. Some defensive sectors did well in 2020, but in 2021, many cyclical sectors performed relatively better than the broader market, and defensive