CONTRIBUTORS
Reece Birtles
Chief Investment Officer, Martin Currie Australia
Introduction
The Value investment style has faced material performance headwinds for a prolonged period, as evidenced in the long run of relative underperformance of Value-style market indices, both domestically in Australia and globally.
These headwinds had been driven by a combination of factors including benign global inflation rates, sub-trend economic growth, and historically low monetary policy settings. This has supported increasingly high valuations across certain segments of the market, particularly in technology and other Growth-style sectors.
We have been talking about the inevitable rebound in Value performance for more than 12 months as economies recover from the COVID-19 downturn, and why investors should be positioned in quality Australian Value stocks.
As the economic reopening gathers momentum, as predicted, the tide has continued to turn in favour of Value performance, and over recent months Growth stocks have seen a severe price reversion.
Contents
In the following paper, we discuss:
- The backdrop to the recent performance upswing for Value;
- The drivers that support a continuation of the performance reversion;
- Why Australia, in particular, represents a meaningful opportunity to take advantage of this theme; and
- Why now, more than ever, is the time to invest in Value.
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