Insights | 15 May 2019

Value Investing: Bruised by 1000 Cuts

Executive Summary

The duration and magnitude of value’s recent underperformance has caused many to ask once again if value investing is no longer effective. While it is possible that secular shifts have helped to compress value’s premium relative to its long-term history, we believe most of the recent decline can be traced to more transitory factors. Our research indicates that value’s underperformance has stemmed from multiple factors including, among other things: a smaller relative income benefit; less tailwind from rebalancing; and an increasing discount to the market. We also believe that even if the normal value premium has compressed, value is currently priced to outperform across all regions.

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Disclaimer: The views expressed are the views of Rick Friedman through the period ending May 2019, and are subject to change at any time based on market and other conditions. This is not an offer or solicitation for the purchase or sale of any security and should not be construed as such. References to specific securities and issuers are for illustrative purposes only and are not intended to be, and should not be interpreted as, recommendations to purchase or sell such securities.
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