Value Investing Back In Vogue?

Is Value Investing Back In Vogue?

It has been a long hiatus for value investing as they have been underperforming the growth approach since 2007. Now growth investors are looking at 10X returns especially with growth stocks such as Tesla, Shopify and Zoom have managed to match or outperform this matrix.

If we look at the performance of value investors, it had been kind of lacklustre; it further makes them look bad with S&P 500 recording new highs. We could take a look at the Aggregate Asset Management Fund (Deep Value Approach) performance as compared to Ark Asset Management (Growth Approach) performance to put things in perspective. It was a thrashing if we look at the data since the inception of Ark in 2015. 

 

Source: ARKK Fund Factsheet

Source: AAM Website

Even the greatest value investor of all time, Warren Buffet, have underperformed the S&P 500 since the start of this bull market from March 2009 as highlighted in this video which we have done up. We examined the value approach underperformance since 2007.

 

However, things might be looking less bleak for the value investing camp. We seem to be seeing some rotation from growth to value in the past few weeks. So perhaps the last surge of the bull market could be driven by the value stocks which are still looking attractive.

Therefore, the risk-reward for value investors going forward could be favourable. With huge liquidity and abnormally low-interest rates, the bull market might have the right conditions to move on to its 12th year- this is the longest bull market in history.

These are 3 value stocks we are looking at and am vested in. The catalyst for their run-up could be the end of the pandemic especially with good news on the vaccine front recently. These 3 stocks are on their first wave upsurge and thus price action looks decent; there could be further upside ahead. With battered valuations, the margin of safety is there.

However, we will be cautious after the value stocks have their day if our base thesis pans out. In the meantime, we are on the side of the Value Avengers for 2021.