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."
AUTHOR
Hope William-Smith
Recommended for you
Grant Hackett has been promoted from CEO of Generation Life to head up the wider Generation Development Group.
Tribeca Investment Partners has made a distribution hire from Australian Ethical in a newly-created role focused on the national intermediary market.
Asset managers may be urged to diversify their product ranges, but investment executives have warned any M&A deal should avoid simply filling gaps and instead consider long-term value creation.
Specialist wealth platform provider Mason Stevens has become the latest target of an acquisition as it enters a binding agreement with a leading Sydney-based private equity firm.
