There has been a shift in the investment environment over the last few months. Having dominated Value for the best part of a decade until November 2021, Growth has since underperformed Value by 14%. This has been epitomised by the fortunes within market sectors: the two sectors that delivered the best returns in the prior decade (Technology and Consumer Discretionary) have delivered the lowest returns since November 2021, down 11 and 13% respectively.
Many investors, recognising the elevated levels of risk in global equity markets, are now considering Value as an alternative to Growth. That makes sense – long out of favour, the latent potential within Value is considerable. However, we would urge some caution. Not all Value is the same – not all will do well in the environment we face. Investors might wish to dig a little deeper into the Value they propose adding.
In this note we take a concise look at the new investment environment, its impact on equities overall, the many facets of Value and why we expect our risk focused quality Value approach to deliver strong performance (absolute and relative) from here.
Please find our more in our Investing at an inflection point paper.