Value investors will win out: Maple-Brown Abbott
Stagflation fears and the end of easy money have already resulted in the de-rating of many high-flying stocks but it is likely there is still further to go which should favour value investors.
Dougal Maple-Brown, head of Australian value equities at Maple-Brown Abbott, said valuations had reached extreme highs by historical levels and even though they had fallen significantly, they had a fair bit more to go.
“We are currently structuring our portfolios to take advantage of the continuing narrowing in dispersions. We believe our value investing approach will position us to benefit from the emerging opportunities in the current market.”
Maple-Brown said that, depending on which measure was used, the highest-rated stocks were more than three standard deviations more expensive at the peak relative to their lowly rated peers, and many sectors are still above their historical levels.
“Furthermore, after spending such a long time so far above average, it would not be surprising if the situation flipped and the highly-rated stocks traded below long-term averages for a period of time.
“The wide value dispersion in the Australian market suggest that our value style of investing will continue to deliver for our investors,” he said.
AUTHOR
Liam Cormican
Recommended for you
Outflows from an Australian private markets fund manager have caused FUM at Pacific Current to decline by $1 billion in the last quarter.
Former RIAA chief executive Simon O’Connor has joined the ethical advisory panel at U Ethical Investors.
Financial services leaders are “all cashed up with nowhere to grow” when it comes to M&A activity, according to Deloitte, with 90 per cent saying they have strong balance sheets ready for an acquisition.
As fund managers are urged to diversify their product ranges, they are finding a faster way to do this is via an acquisition of existing firms but experts say it is not without potential culture clashes.
