Why Value? Why Now?
Find out more in this new whitepaper.
Understand the Long-Term Value of Value
To find out more about Value, and its short-term and long-term potential, Symmetry’s Research Team has put together a major and timely white paper: The Conundrum of Value. You will learn about the risky and concentrated Growth anomaly and why there may never be a better time to invest in academically-validated factors like Value and Small.
Overweighting Large Growth—It Works Until It Doesn’t
In volatile times like these, the advice and guidance you provide as a Financial Advisor are critical in helping your clients enjoy better long-term financial outcomes. A key part of this is making sure your clients aren’t taking more risks than they are comfortable with—or exposing their portfolios to unnecessary hazards.
The Anomalous Growth
Over the last decade, Growth stocks, especially Large Growth stocks in the United States have enjoyed an unprecedented run, with the S&P 500 returning almost 14% a year.*
But the majority of these returns have been driven by just 5 giant stocks---Microsoft, Apple, Amazon, Alphabet/Google, Facebook—which represent over 20% of the overall US market-cap…a historic level of concentration in a handful of names.
Remove these names out of the Wilshire 5000 and US market returns over the last three years have been essentially flat.Meanwhile…Value’s annual return of 11.71% over the last ten years was in line with its long-term historical norms.1 It is Large Growth whose performance has been anomalous.
When Does the Music Stop?
In the 83 ten-year periods starting in 1936, Growth outperformed Value only eight times. Five of those ten-year periods ended in each of the last five years. At some point this enthusiasm for potential future growth tips over into irrational exuberance.
While we have no crystal ball, and can’t predict when Growth will give way to Value, many believe it could happen soon. A number of financial experts and Wall Street strategists have said that this year or next could in fact be the year of Value
In the words of famed investor and former George Soros colleague, Jim Rogers, “If you buy Value, you won’t lose much even if you’re wrong.”
What Should Advisors Do?
All this means that you should take another look at your clients’ portfolios and how they are invested.
Are clients properly diversified…or over-allocated to Growth? Do they have sufficient tilts to factors of return such as Value (and Small and Minimum Volatility)? Are they in the right portfolios for their comfort with risk and long-term goals?
For more than a quarter century, Symmetry Partners has built globally-diversified, Evidence-Based portfolios that tilt towards the 8 factors of return--including Small, Value, Momentum—identified by academic research as offering the potential for higher returns over time and lower risk. We put science on your side.
Recorded Webinar: The Case for Small, Value & Other Factors of Return
Symmetry’s Research Team hosted an interactive webinar highlighting the critical role Small, Value and other factors can play in helping your clients achieve their long-term investment goals. In this webinar, we looked at the research and what it means for how you build portfolios today. Click below to watch the recording.
Questions? Contact Symmetry's Regional Team
For Advisor Use Only. Not for Public Distribution. Symmetry Partners, LLC is an investment advisory firm registered with the Securities and Exchange Commission. The firm only transacts business in states where it is properly registered, or excluded or exempted from registration requirements. No one should assume that future performance of any specific investment, investment strategy, product, or non-investment related content made reference to directly or indirectly in this email will be profitable. As with any investment strategy, there is the possibility of profitability as well as loss.
*All indexes have certain limitations. Investors cannot invest directly in an index. Indexes have no fees. Historical performance results for investment indexes generally do not reflect the deduction of transaction and/or custodial charges or the deduction of an investment management fee, the incurrence of which would have the effect of decreasing historical performance. Actual performance for client accounts may differ materially from the index portfolios.
S&P 500: Represents the 500 leading U.S. companies, approximately 80% of the total U.S. market capitalization.
**Symmetry Partners’ investment approach seeks enhanced returns by overweighting assets that exhibit characteristics that tend to be in accordance with one or more “factors” identified in academic research as historically associated with higher returns. Please be advised that adding these factors may not ensure increased return over a market weighted investment and may lead to underperformance relative to the benchmark over the investor’s time horizon.
1 Advisor Perspectives, “Why Markets Don’t Seem to Care If the Economy Stinks” by Barry Ritholtz, 8/5/20