Growth stocks better than value investing in 2018
The market continuous its shift in favour of growth stocks, leaving fund managers with a value-focused investment strategy struggling to keep up with the index, according to Lonsec Research.
Value investors were those that were looking for well-run businesses with solid company fundamentals that may be undervalued due to industry headwinds or temporary negative events.
According to the Lonsec study, value shares managed to outperform growth over the past ten years despite a value comeback in 2016 and the early part of 2017, however, recent performance proved the average return for value managers was in negative territory so far in 2018.
Lonsec said the behaviour of value and growth shares over different periods and the tendency for one or the other to outperform underlined the importance of diversification, not just across markets and sectors, but cross investment styles as well.
Also, despite the weaker performance of Australian shares in 2018, growth companies remained in favour and the companies operating in the consumer staples and biotechnology business were the main drivers of market returns.
At the same time, value shares which were represented by the MSCI Australia Value Index were weighed down by poor performance from financials and telecommunications shares, including the major banks that were under pressure from the Royal Commission into Financial Services.
AUTHOR
Oksana Patron
Recommended for you
Record flows into iShares ETFs helped BlackRock’s assets under management reach US$13.5 trillion in the third quarter, but it reported outflows from the APAC region.
Regal Partners has passed $20 billion in funds under management, helped by $723 million in net inflows during the last three months.
Global investment manager Fidante has formed a strategic partnership with a London-based asset manager to secure exclusive distribution rights across the APAC region.
Blackwattle Investment Partners has hired a management trio from First Sentier Investors – who departed amid the closure of four investment teams last year – to run its first equity income offering.
