tmmonline.nz  |   landlords.co.nz        About Good Returns  |  Advertise  |  Contact Us  |  Terms & Conditions  |  RSS Feeds

NZ's Financial Adviser News Centre

GR Logo
Last Article Uploaded: Friday, May 20th, 6:17PM

News

rss
Latest Headlines

The return of value investing

After years of being beaten by growth, value investing is making a comeback.

Tuesday, January 18th 2022, 6:22AM

S&P Dow Jones Indices says in the past year value investing completed its first year of outperformance in five; and the second year of outperformance in the past 10 years. An analysis of the New Zealand market (see graph below) shows that value outperformed last year.

PM Capital founder and chief investment officer, Paul Moore, firmly believes that value is about to become the investment style to follow. He says the results from last year show that the shift to value is just starting.

“We believe a major rotation from growth to value stocks is in its infancy – and that this opportunity will play out over a typical 10-year cycle.

“We continue to see opportunities in value segments of the market, notably banks and commodity stocks, some of which trade at record-low relative valuations.”

He says that PM Capital expect growth stocks, including those in the technology sector, on aggregate to underperform value-focused sectors, such as banking, over the coming decade.

“This rotation from growth to value stocks will ebb and flow. No change in market leadership is orderly. The first leg of the value rotation began in early FY21, driving strong performance. But growth stocks returned to favour in the latter part of last year as fears of the Delta Covid-19 variant resurfaced, and as the Omicron variant emerged.”

He says this short-lived move back to growth stocks, at the expense of value stocks, meant value managers like PM Capital could buy high-quality companies at bottom-quartile valuations.

Driving this rotation is a significant move in long-term interest rates asrising interest rates are a bigger headwind for the growth stocks, which typically have higher relative valuations.

Moore says there are other notable economic and market developments to support his view including a signs of wages growth in the US, a surge in Germany’s benchmark Bund yield towards zero, potential for orderly rate rises in Europe and the US, elevated commodity prices.

Moore says, PM Capital’s long-term thesis for a decade-long rotation from growth to value stocks “remains firmly intact.”

“Market action so far this year adds to our conviction.”

He warns investors that future returns will be lower in the next few years compaed to recent years as interest rates rise.

“Gains from global equities since the March 2020 low are unlikely to repeat anytime soon.”

Tags: PM Capital S&P Dow Jones value growth

« Ignite Advisers look to the futureFlint investment platform ignited »

Special Offers

Comments from our readers

No comments yet

Sign In to add your comment

 

print

Printable version  

print

Email to a friend
News Bites
Latest Comments
Subscribe Now

Weekly Wrap

Previous News
Most Commented On
Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA 5.35 4.49 5.25 5.55
ANZ 5.54 5.15 5.85 6.15
ANZ Blueprint to Build 2.78 - - -
ANZ Special - 4.55 5.25 5.55
ASB Bank 5.35 4.49 5.25 5.55
Avanti Finance 5.45 - - -
Basecorp Finance 6.45 - - -
Bluestone 5.29 7.49 7.59 -
BNZ - Classic - 4.55 5.25 5.45
BNZ - Mortgage One 5.55 - - -
BNZ - Rapid Repay 5.55 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Std, FlyBuys 5.55 5.35 5.94 5.99
BNZ - TotalMoney 5.55 - - -
CFML Loans ▲6.45 - - -
China Construction Bank 5.50 5.40 6.14 6.40
China Construction Bank Special - 4.45 5.19 5.45
Credit Union Auckland 5.95 - - -
First Credit Union Special 5.85 4.70 5.20 -
Heartland Bank - Online 4.00 3.85 4.70 4.84
Heretaunga Building Society 5.95 4.80 5.50 -
HSBC Premier 5.49 4.39 5.15 5.39
HSBC Premier LVR > 80% - - - -
Lender Flt 1yr 2yr 3yr
HSBC Special - - - -
ICBC 5.25 4.29 5.09 5.35
Kainga Ora 5.43 4.57 5.58 5.85
Kainga Ora - First Home Buyer Special - 2.25 - -
Kiwibank 5.00 5.55 6.19 6.39
Kiwibank - Offset 5.00 - - -
Kiwibank Special 5.00 4.55 5.19 5.39
Liberty 4.84 - - -
Nelson Building Society 5.95 4.95 5.85 -
Pepper Essential 3.44 - - -
Resimac 4.59 5.60 6.16 6.29
Lender Flt 1yr 2yr 3yr
SBS Bank 5.29 4.69 5.35 5.49
SBS Bank Special - 4.19 4.85 4.99
Select Home Loans 4.09 4.29 4.86 5.09
The Co-operative Bank - First Home Special - ▲4.19 - -
The Co-operative Bank - Owner Occ 5.45 ▲4.29 5.19 5.45
The Co-operative Bank - Standard 5.45 ▲4.79 5.69 5.95
TSB Bank 5.59 5.14 ▼5.79 6.15
TSB Special 4.79 4.34 ▼4.99 5.35
Unity 5.65 4.80 5.50 -
Wairarapa Building Society 5.24 4.55 5.20 -
Westpac 5.54 5.09 5.79 6.09
Lender Flt 1yr 2yr 3yr
Westpac - Offset 5.54 - - -
Westpac Special - 4.49 5.19 5.49
Median 5.45 4.55 5.25 5.52

Last updated: 19 May 2022 10:42am

About Us  |  Advertise  |  Contact Us  |  Terms & Conditions  |  Privacy Policy  |  RSS Feeds  |  Letters  |  Archive  |  Toolbox  |  Disclaimer
 
Site by Web Developer and eyelovedesign.com