Q2 2026 Asset class outlook: Value style-investing

By: MFS Investment Management

As part of our Asset Class Outlook series, our sub-advisor MFS Investment Management (MFS) shares its views and perspectives for Value style investing (Value) in the equities space for the second quarter of 2026.[1]

Value has had a mixed start in 2026. Early momentum‑led leadership has been supported by a pro‑cyclical stance and investors’ concerns on AI‑led growth driving a rotation towards Value and the tangible assets needed to deliver on AI capital expenditures expansion. This has led to greater dispersion beneath the surface of equity markets. Since the escalation of the Iran conflict at the end of February, factor performance has begun to shift. Historically, MFS believes periods of higher energy prices and rising inflation expectations have tended to favour Value.

2026 shouldn’t be a repeat of 2022

Importantly, however, this is not yet a repeat of the 2022 energy shock. The inflation impulse looks more limited, policy rates are already restrictive, and global growth is slower than in 2022. MFS believes Value’s outlook is supportive rather than unequivocally dominant.

If higher energy prices translate into firmer inflation and bond yields without tipping growth into recession, MFS believes Value could continue to benefit from the ongoing cyclical recovery. Policy makers face a conundrum, and how they respond will be an important determinant of Value’s prospects.

If inflation concerns keep rates higher while higher input costs begin to weigh on demand, this would be less supportive for Value. Should the shock evolve into a broader growth slowdown, Value will likely underperform and higher‑quality balance sheets may once again be preferred.

Conclusion

Overall, Value remains attractively positioned, but returns are likely to be more selective and regime‑dependent than in past inflation cycles.

^[1] Data and views as of March 31, 2026 unless otherwise noted.

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Views expressed are those of MFS Investment Management Canada Limited, sub-advisor to select Sun Life mutual funds for which SLGI Asset Management Inc. acts as portfolio manager.

MFS Investment Management Canada Limited is the sub-advisor to the Sun Life MFS Funds; SLGI Asset Management Inc. is the registered portfolio manager. MFS Investment Management Canada Limited has appointed MFS Institutional Advisors, Inc. to provide additional sub-advisory services.