Return Gap Between Value and Growth at 25-Year High

The coronavirus pandemic has only deepened the performance gap between value and growth investing, which is now at the widest point in 25 years. This according to a recent article in the Financial Times. Data cited from the wealth management firm Brewin Dolphin and Thomson Financial Datastream shows that value funds have returned 624% since 1995 compared to a 1,072% return from growth funds over the same period. The article notes that value investing is… Read More

The “Value” Phoenix May Rise

A recent Advisor Perspectives article argues that the value investing strategy shouldn’t be counted out just yet. “We have seen flickers of value’s reemergence,” it reports, adding, “After outperforming momentum by roughly 6% in September 2019, value has staged another noteworthy rally, outperforming momentum by over 2.5% in just one week. The real question is: when will the value rally stick?” The article cites the following key points: Factors are cyclical: While some contend that… Read More

Value Alive or Dead? Debate Rages Among Quants

Following value’s worst quarter of performance in a century, leading quants are “butting heads” in a hot debate over whether the strategy can survive. This according to a recent article in Bloomberg. “After kicking off the factor boom in the early 90s,” the article reports, “value is punishing the faithful three decades on. Billions are getting wiped out, quant shops are shrinking, and even its architects Eugene Fama and Kenneth French can’t quite figure out… Read More

Value Stocks May Outperform for These 3 Reasons

A recent article in Advisor Perspectives suggests that the “potential return opportunity in a value-oriented equity strategy might be much larger than normal today” for the following three reasons: Long-term premium on value strategies compensates investors for disaster risk: If the worst of the Covid-19 pandemic is behind us, “history would suggest the potential for a large payoff on value strategies,” the article argues, adding, “In the United States, value stocks have, on average, outperformed… Read More

How to Play a Value Stock Rebound

“If ever the time was ripe for the value trade to work, it is now.” This according  to a recent article in Barron’s. The article notes that while counting on a value rebound amid the coronavirus pandemic “hasn’t been a winning strategy,” a shift may be imminent: “Value stocks are looking very, very cheap relative to everything else,” and could benefit from the extensive support coming from the U.S. government. The article notes that the… Read More

The Case For Value Stocks

By Jack Forehand, CFA One of the biggest lessons I have learned in my investing career is the importance of being able to argue the other side of something I strongly believe in. Confirmation bias is one of the biggest enemies of successful investing. It leads us to seek out information that agrees with our position. It causes us to follow people who tell us what we want to hear. It makes us avoid those… Read More

Rob Arnott is All in On Value

In a recent interview with CityWire, Research Affiliates chairman and founder Rob Arnott explains why value investing has suffered from the coronavirus pandemic but says it isn’t time to run away from value stocks. “We’re in one of the few industries in the global macroeconomy where customers hate a bargain,” quips Arnott, describing how depressed stock prices are not drawing investors, adding, “That’s the nature of the investing world.” Arnott explains that value stocks have… Read More

Value Investors, Don’t Expect a “Massive” Comeback

A recent paper published by the Man Group’s quantitative investment unit (Man Numeric) suggests that while the value strategy may not be permanently broken, investors should not expect an impressive comeback. This according to an article in Institutional Investor. “While there is no debate over the recent difficulties of value, and it is true that historically value has recovered strongly following periods of poor performance, that is a fairly weak intellectual argument,” writes Daniel Taylor… Read More

Seth Klarman Defends Value Investing

In a letter to clients, billionaire hedge fund manager Seth Klarman suggested that value investing will have its day in the sun once again. This according to a recent CNBC article. The Baupost CEO said several factors, including the proliferation of passive investing, have “created market mispricings that will soon lead to a pay off for the long underperforming strategy.” “As funds continue to flow into the hands of indexers, stocks not included in prominent… Read More

Ang Warns About Value

BlackRock’s managing director Andrew Ang is urging investors to be cautious in how they return to the long-underperforming value factor, according to a recent article in Institutional Investor. Although several big-name factor investors argue it’s time for investors to buy inexpensive value stocks—including AQR’s Cliff Asness and Research Affiliates founder Rob Arnott—Ang warns to exercise caution, suggesting that some might be tempted to “buy into the value factor simply because it appears inexpensive,” the article… Read More