I recently gave a talk at a virtual investment conference entitled ‘New World Insights: Exploring themes set to outperform’. Of course, the full extent and long-term impact of Covid-19 will remain unknown for some time. But as the world embarks on the long journey back to social and economic normality, I questioned whether this is the moment ‘value’ is about to return to favour, commented on the ‘active’/’passive’ debate, and highlighted those themes which will continue to present good opportunities for the patient investor.
The resilience of growth
The woes of value-focused investors have continued at a clip during the coronavirus crisis. Recent figures suggest growth stocks in the US outperformed their value brethren by a staggering 28 per cent in the first half of the year. In Japan, the rest of Asia and Europe, the outperformance was in the mid to late teens. Despite the gulf in valuations and the last decade’s underperformance, value stocks have continued to disappoint. This is not how value investors thought it would be during a downturn, given how cheap such stocks are.