The Turn in Value is Just Getting Started

We Believe Value Remains Priced for Continued Outperformance

Over the past decade it has seemed like Value investors have been very much left on the sidelines, bemoaning rampant speculation and valuations untethered from fundamental reality, while Growth investors have, quite frankly, been living it up in some style.

There was a meaningful reversal in Q1 2022, when the MSCI ACWI Value index beat its Growth counterpart by an impressive 8.8%. Amazingly, after this one (admittedly strong) quarter, we have started to get the odd question as to whether the Value versus Growth reversal has played out. Despite a late-quarter surge in Growth aided by the return of retail investor enthusiasm, the answer is an emphatic “No!”

From the beginning of 2009 through the end of 2021, the MSCI ACWI Value index returned a commendable 9.2% per annum. However, MSCI ACWI Growth left Value trailing in the dust over the period, delivering a staggering 14.5% per annum and outcompounding Value by an eye-watering 265% cumulatively. Some might argue that Growth companies have done fundamentally well (yes, a small number of companies have done spectacularly well, but they steal the headlines) or that the world has changed somehow. As we’ve written about previously, we disagree with that sentiment.