The US and many global markets surged in the first half of the year, with many growth-oriented stocks outperforming. The S&P 500 is up 15.9% in the first six months of the year — its best first half since 2019. Meanwhile, the MSCI World Index is up more than 12%. “The 1H of 2023 is a mirror image of 2022, with asset classes underperforming and vice versa. For example, growth stocks outperform while commodity stocks underperform” , Bryan Cheung, associate director of management research at Morningstar, told CNBC Pro. Not surprisingly, the best performing sector was information technology, which grew 30.67% in the first half of the year, according to data compiled by Swiss private bank Julius Baer. This is followed by the media sector (25.9%) and the consumer cycle (16.15%). “The US-led equity recovery in the first six months of 2023 is unusually focused on so-called ‘magnificent seven’ mega-cap tech stocks. Other artificial intelligence topics are also broadly benefiting from the excitement surrounding its long-term potential, such as semiconductor stocks,” Cheung said. He added that is reflected in the best performing Morningstar categories, which are US large-cap growth equity, tech industry equity and Taiwan’s equity. – based on the average return of the portfolio. Here are the actively managed mutual funds that have performed the most in the first half of this year, according to data from Morningstar. Here are some of the stocks that appear most frequently in the funds’ top 10 holdings, with potential upside targets and buy ratings, according to FactSet. The stock with the biggest upside potential is the US-listed stock of Chinese tech giant Alibaba, at nearly 62%, with an analyst buy rate of 87%. Argentinian e-commerce giant MercadoLibre captures the next highest potential gain of 33%. Looking ahead, Cheung advises investors to look beyond short-term performance and caution against chasing strong recent performance. He said studies have shown that funds with the highest short-term returns tend to disappoint. “Instead of betting on a new bull market or a bear market rally, which is difficult to predict, investors should focus on how to position their portfolios,” he said. based on current valuation”. Investors should rebalance their portfolios from stocks that have become more expensive – like technology, to more attractive value sectors like value-driven stocks and Asia as well. as emerging markets. “Aside from equities, fixed-income assets offer improved yields and diversification potential today and are on a better footing than they were two years ago to hedge downside risk,” said Cheung. price in an investor’s portfolio.