Value stocks saw a strong Q4 in 2020 and that trend should continue into 2021, after what has been a weak decade for value stocks compared to growth, according to boutique fund managers Maple-Brown Abbott (MBA).
Dougal Maple-Brown, MBA head of Australian equities, said the number one question which clients and consultants had asked them over the last couple of weeks was whether this was it for value or was it part of a sustained turn as part of a market rotation.
“Not surprisingly, we think it’s the latter – after a strong quarter, the [ASX 300] index was up about 14% and most of our funds did 4-5% better than that,” Maple-Brown said.
“The traditional growth stocks went nowhere; the poster child [of growth stocks], CSL, was flat over the quarter, down 1%.”
The firm saw value stocks finish the year with a strong run, led by Sims Metal Management (SGM) returning 77.4%, Link Administration Holdings (LNK) returning 48.8% and Janus Henderson (JHG) returning 43%.
“Probably even more scary were the hyper-growth stocks, led by Polynovo (PNV), Afterpay (APT), EML Payments (EML) and Xero (XRO),” Maple-Brown said.
“They had unbelievable runs for the earlier six to nine months, then also kept running through December.
“The hyper-growth stocks didn’t go flat like growth stocks, they actually went on with it.”
Stock total returns in Q4 2020