Equity value managers outperform in Q4
Value and growth style managers are receiving significantly different results in the performance of different investment styles in the final quarter of the calendar year for equities markets, with value style pushing ahead in its strongest quarter growth in a decade, according to Frontier Advisors.
Frontier Advisors director of research, Fraser Murray, said the performance of equities in the closing quarter was positive for investors and a surprise strong result off the back of a politically turbulent year.
The significant win was for value managers, who outperformed growth managers by large margins.
Among Australian growth managers, Frontier analysis showed growth managers were nine per cent behind the ASX200 for Q4 compared with value managers, who had outperformed by up to six per cent. Australia stood relatively strong when compared to global equities portfolios, where growth managers were up to 11 per cent behind benchmark indices, with value managers up to eight per cent ahead.
"Leading up to September 2016, growth managers had consistently and strongly outperformed their value counterparts for some time," Murray said.
"In just three months, they gave a lot of that back."
According to Murray, value managers had traditionally focused on market segments like materials, industrials and financials, which had been out of favour until recently.
"The fourth quarter of 2016 was the best performance for the value style, the worst for the growth style, since the early 2000s," he said.
"It was actually the first strong value quarter in many years and better than any quarter during the GFC [Global Financial Crisis] and the subsequent recovery."
Market developments across international sectors had been a catalyst for a change in the equities market, which Murray said had been simply reflective of the change.
"[This does] not indicate superior skill of one group over another, but rather highlight the speed at which pockets within equities markets can change, and of the impact that can have on specific manager performance."
AUTHOR
Hope William-Smith
Recommended for you
Pinnacle’s London affiliate, Life Cycle Investment Partners, has secured over $15 billion in FUM in its first year and achieved profitability, the firm’s fastest affiliate to do so.
For foreign fund managers looking to come to Australia, a financial services law firm has shared which regulatory option offers them the quickest pathway?
Betashares has partnered with a US fund manager to form a private capital division aimed at providing financial advisers and wholesale clients with private markets investments.
GQG Partners has lost over US$1 billion from an institutional client, contributing to FUM falling by US$6 billion in July, as it flags fund underperformance could lead to continued outflows.
