For anyone invested in a well-diversified portfolio of global shares, an important psychological point was reached in the past week.

The year-on-year comparisons for indices of global shares turned positive, meaning the value of investments held a year ago are now at roughly the same value they were a year ago. Pandemic? What pandemic?

Of course, very few are celebrating this milestone. Even if they welcome the strength of the recovery for shares, investors have been left bruised by a tumultuous period this year that makes it easy to forget how good most of the past 12 months have been. Prices continued to rise after May 2019 with losses then concentrated in the shorter period since Covid-19 struck in February 2020. Compared to the highs immediately before the pandemic, most portfolios are still very much underwater.

Furthermore, those who look at stock markets performance beyond the headline index level will see how skewed the recovery has been. Technology companies were already dominant before the Coronavirus. Lockdown has only accelerated the trend as our lives have become more digital and more distanced.

Global share indices are skewed towards the US market, and the US market is dominated by a small number of huge technology-based companies. Diversified portfolios will hold significant weightings in these companies, making their performance important to all of us.

Even the worst performer among them, Alphabet, home of Google, is only 6% lower than its pre-pandemic peak. Apple has lost just 1.8% in lockdown and Microsoft 1.6%, but Facebook is up 5%, Netflix is up 8% and Amazon is up 12%. Please remember past performance is not a reliable indicator of future returns.

The strong performance of tech - and some other sectors like healthcare - has been offset by far deeper losses elsewhere. The effect is captured in a report today in the Financial Times, which explains that the Russell 3000 index, which tracks the largest US stocks, is down 11% overall in the pandemic. A third of those 3000 companies remain down at least 30% and half are down 20% or more. Just a third have matched or outperformed the index.

Stripped of the tech gains, investors would be feeling much worse about the world.

The increased dominance of tech stretches even further the divergence in valuations between ‘growth’ companies - those able to reliably grow earnings whatever the prevailing conditions - and ‘value’ companies - those which need an upturn in economic activity to outperform. It’s a subject visited this week by my colleague Tom Stevenson.

It is possible the divergence will grow even more as recessionary conditions take hold, and investors may find themselves reliant on the tech giants for a while longer. Yet there has to be a question whether their pandemic advantage has now been fully priced in, leaving them little space to grow much more.

As such, there will be those who begin to see sense in building exposure to value stocks now, in anticipation of an economic recovery as the world learns to live with Coronavirus. That recovery may be some way off but investors buying now at least can reassure themselves that they are buying when prices are depressed.

Fidelity Special Situations buys shares in UK companies with an emphasis on value. It has a history of performing best when the economy is growing. The fund is managed by Alex Wright and features on out Select 50 list of favourite funds.

Important information: Investors should note that the views expressed may no longer be current and may have already been acted upon. Overseas investments will be affected by movements in currency exchange rates. Select 50 is not a personal recommendation to buy or sell a fund. Reference to specific securities should not be construed as a recommendation to buy or sell these securities and is included for the purposes of illustration only. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to an authorised financial adviser.

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