(Re)defining Value: Managers under Scrutiny

July 2021

Redefining Value, Managers Under Scrutiny

Strong returns for the value style are putting value equity managers at the forefront of investors’ minds. This paper examines a sector reshaped by a decade of underperformance.

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Redefining Value Whitepaper

What is value investing in equities? bfinance now identifies four distinct investment approaches – defined here as Deep Value, Classic Value, Quality Value and Moderate Value – and examines their performance and risk profiles. These categories are helpful when forming strategy, selecting managers and assessing performance.

What’s really inside value portfolios? Investors should seek to avoid preconceptions about what value investing is likely to mean for style exposures, sector positioning or ESG. Analysis of asset manager positioning reveals a wide variety of approaches, and often (potentially counterintuitive) positive exposures to growth metrics, technology stocks and MSCI ESG ratings versus the benchmark.

How have active managers performed? Active value managers have been buoyed by the value rally in 2021, although the strength of that tailwind has varied greatly depending on the sub-strategy. In addition, active managers have delivered consistent outperformance versus the MSCI World Value index.


Redefining Value Whitepaper Abstract

Commentators engaging in debates around value investing often point to the challenges for the style in a world where intangible assets and technological disruption have become increasingly important; these characteristics, after all, are not generally captured by conventional book value metrics.

Yet this begs the question: to what extent have asset managers in this space already evolved to respond to these difficulties? What do today’s value strategies actually look like? This paper coins four distinct shades of value equity investing: Deep Value and Classic Value have become less popular over time, while the bulk of new launches (and recent searches by bfinance clients) are oriented towards the Quality Value and Moderate Value sub-styles. This examination also helps to rid us of preconceptions about what value equity strategies provide in terms of style exposures, sector biases and ESG scores.


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This commentary is for institutional investors classified as Professional Clients as per FCA handbook rules COBS 3.5R. It does not constitute investment research, a financial promotion or a recommendation of any instrument, strategy or provider. The accuracy of information obtained from third parties has not been independently verified. Opinions not guarantees: the findings and opinions expressed herein are the intellectual property of bfinance and are subject to change; they are not intended to convey any guarantees as to the future performance of the investment products, asset classes, or capital markets discussed. The value of investments can go down as well as up.

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