As with so many debates that have passionate adherents, the value-versus-growth debate is not one where investors need to pick a side. Ultimately, both value and growth styles serve complementary roles.
Value stocks are hit harder in market drawdowns but come out of them faster and harder, according to research from Pzena Investment Management.
Where the market goes from here is a question each investor much face on their own, but for those looking to chase the growth tail and tip into what are a small clutch of highly price equities, Pzena has a sobering history lesson.
Contrarian investors are adept at spotting misalignment that leads to arbitrage between real value and perceived value. But it isn’t easy. “True bargains are hard to come by,” says Orbis Investments’ Eric Marais.
The recent underappreciation of value stocks has made them an attractive proposition, but knowing the most important metrics to look at when appraising companies is crucial.
Markets may not always do what’s expected, but fundamental valuations and adherence to timelines will usually win out eventually according to Atrium Investment Management.
The past two years have seen poor performance for value style indices and typical value managers globally, and stronger performance for momentum, growth and quality factors. There have been recent comments in the market that value is broken or that this could be the death of value.
