Glam rocked – New research shows value outperforming growth all around the world
The almost two years since The Value Perspective continued its bid for world domination by adding a global mandate to our UK and European-focused offerings have occasionally seen us challenged on how effective a value approach can be on a worldwide basis. “Just because you have a track record in the UK and Europe,” we are asked, “what makes you think you can do this globally?”
We are able – most of the time – to resist the temptation just to shoot back “What makes you think we can’t?” because there is a wealth of studies and statistics to which we are able to point for support. To this may now be added Value vs glamour: A long-term worldwide perspective, the latest research from The Brandes Institute, which has updated all its data to the end of June 2014.
Take for example the following chart, which shows that value stocks (defined here as those with low price-to-book ratios) not only perform well in absolute terms within three separate regions – the US, the developed economies excluding the US and emerging markets – they also outperform so-called ‘glamour’ stocks (those with high price-to-book ratios) across those areas.
Source: The Brandes Institute; Worldscope via FactSet as of 6/30/2014
Just to be clear, in the investment lexicon, ‘glamour’ is merely a US equivalent of what we in the UK would recognise as ‘growth’ rather than any sort of disparagement of value investors’ looks. Mind you, even if we were seen as investing’s ‘ugly sisters’, The Brandes Institute’s research would suggest value investors are the ones who get to live happily ever after here – at least on a rolling five-year basis.
Fund Manager, Equity Value
I joined Schroders in 2004 as an equity analyst in the European Equity Team initially specializing in the Industrial sectors before moving on to Consumer-based companies and finally Insurance. In 2007, I became a co-manager on a fund investing in undervalued European companies and took on sole responsibility for the fund in May 2010. Prior to joining Schroders, I worked at Hedley & Co Stockbrokers and Deutsche Asset Management as a trainee analyst.
The views and opinions displayed are those of Nick Kirrage, Andrew Lyddon, Kevin Murphy, Andrew Williams, Andrew Evans, Simon Adler, Juan Torres Rodriguez, Liam Nunn, Vera German and Roberta Barr, members of the Schroder Global Value Equity Team (the Value Perspective Team), and other independent commentators where stated.
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