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The functionality of value investing hinges on one important and fundamental premise: that humans are fallible and emotional operators that over-react, misjudge and fall victim to overconfidence in their own assessment abilities.
The vast majority of quality asset managers will go through periods of five years of underperformance or more, which makes it difficult for that firm to take smart value bets and hold them until maturity beckons.
An elevated market is a good thing, but investors that take a valuation mindset into asset allocation need to be wary of what that means for prices. “Chasing momentum” is a real danger, says Australian Ethical’s Mark Williams.
While the small companies sector of the share market is poised to benefit from the predicted retreat of inflation, the tailwinds really kick in when you throw active management into the mix according the Invesco team.
It’s not always about finding companies that have the biggest market share or the ones that dominate the headlines. For true value investors, the key is to select companies whose forward value is fundamentally underappreciated.
Australia may not have the Magnificent Seven tech stocks, but a heavy top end on the ASX means concentration risk is just as present, Atchison’s says. According to Australian Ethical, that puts the domestic small companies sector right in frame for investors.
Investors will need to adjust their expectations (and portfolios) to account for higher for longer interest rates, slower economic growth, stickier inflation and a testing geopolitical environment. Keeping key pillars of quality in mind when assessing companies remains critical.
Rising interest rates and elevated stock multiples have brought down the equity risk premium and created a highly advantageous environment for value investors, according to Pzena Investment Management.
The current market isn’t just a poor marking stick for active investment expertise, but a dangerous one, with concentration risk at alarmingly high levels. Are fund managers right to be wrong?
With over 2 million Australians invested in ETFs and every second SMSF holding them, it’s little wonder managers are keen to launch active ETF versions of their most successful funds.
Historically, periodic outperformance by a cohort of stocks linked by sector or region – often with a catchy moniker – has been a mainstay. As has that group’s inability to maintain dominance over the long term.
HMC Capital has demonstrated how effective its active engagement strategy is with the success of the Sigma/Chemist Warehouse merger. Now David Di Pilla and his team have their sights set firmly on the real estate sector.