Factor investing has gained greater adoption as the approach and science behind it both develop. And at the front of the conversation are two factors: growth and value. While each camp has proponents, it’s those on the value side who are increasingly worried about the divergence in portfolio performance.
Applied to equities investing, and other assets, growth and value factors are natural opposites. Growth strategies favor stocks that might be overpriced, but offer big potential and promise. Value stocks, on the other hand, are relatively underpriced, but are attractive because of strong company fundamentals that may belie recent downturns in trading and indicate a deal.
For most of the observed modern era, growth and value have both seen periods of outperformance and underperformance. However, ever since the Great Recession, value has been mired in a sustained slip, bringing some to the brink of asking if the value factor is even alive at this point. Those naysayers, however, may want to wait a bit before they start shoveling dirt. Though warning signs abound in the present, appreciating the history of the value factor over time helps provide context. Taking a closer look at the numbers may also demonstrate a different picture than what many assume from the surface level — that is, value is returning a whole lot more than some may think.
In our white paper “Is the value factor really dead?”, we pull back the layers and examine the story the data tells about value’s real performance, as well as how OBS can help you capture the value premium with structured investing.
Download the white paper today to read more about the value factor.