Value-based investing back on the cards
Market evidence is mounting, with indicators showing that economies have reached an ‘inflection point' characterised by the weakening of growth stocks which could see the return of value-based investing, according to Perennial Value.
Perennial Value managing director, John Murray, said that value investment had dropped out of favour in recent years, even with evidence of strong relative long-term performance and the weakening of growth and defensive stocks.
"Defensive and growth stocks are currently looking expensive," he said.
"Some argue it is always a good time to invest in value companies, we see ample evidence of an inflection point now in terms of value swinging back in favour."
In the face of strong investment headwinds, Murray was confident that record low global interest rates, low growth and slow earnings growth had driven investors to defensive stock positions, now to be called ‘expensive defensives'.
"Australia has among the most expensive defensive stock ‘darlings' in the world, with potentially a lot more downside in those stocks to come," he said.
"Investors may simply exit these largely expensive defensive stocks and we believe the swing back to value is very much on the cards."
Recommended for you
In the latest Meet the Manager profile, Money Management speaks with Michael Skinner, founder and managing director at Blackwattle Investment Partners.
Perpetual has seen AUM rise 6 per cent in the last quarter but the departure of a longstanding JOHCM fund manager led to outflows of $2.2 billion from his strategy.
Global fixed income fund Bentham Global Opportunities has been added to several major platforms, enabling it to be accessed more easily by financial advisers.
Following yesterday’s news about First Sentier Investors closing four investment teams, a second global asset manager has announced it is closing its only dedicated Australian fund.
